Data from the U.S. Census Bureau show that in Larimer and Weld counties combined, the number of single-family permits has jumped from 271 in January and February of 2012 to 447 in the same months in 2013.
The two counties have issued almost equal numbers of permits so far in 2013, with 225 permits for new construction in Larimer County and 222 in Weld. At this time last year, Weld County had issued 164 permits, outpacing Larimer County’s 107.
While some of the construction is going on in Northern Colorado’s larger cities, records indicate that the smaller, outlying communities are seeing activity as well, especially in Weld County.
Baessler Homes is busy building in Ault, Eaton and Johnstown, according to Robbie Miner, a broker representing Baessler.
The reasons for building in smaller communities are two-fold for Baessler, Miner said.
One reason is a loan program with the U.S. Department of Agriculture that provides loans that don’t require a down payment for a home in a rural community. The USDA has two different programs that offer home loans with no down payments for qualifying borrowers, according to information provided by Cheryl Scofield, northeast area director for rural development for the department.
Beyond that, building homes in Northern Colorado’s rural communities allows builders to construct more affordable homes than building in a city, Miner said. Land prices and average home costs are lower in smaller communities.
Recent increases in home prices have made affordable homes even more desirable than usual, Miner said, and outlying areas often have lots at more affordable rates. A shortage of affordable lots has been developing for several months and will persist into the traditionally building-heavy summer months of 2013.
Many local builders saw this shortage coming and stockpiled lots when they could, Miner said. Baessler, for example has enough lot inventory to last two to three years, according to Miner.
Immediately following the end of the recession, which officially occurred in 2010, according to the Federal Reserve Bank of Kansas City, many builders were able to purchase lots for very low prices because of foreclosures and short sales.
Those low lot prices narrowed the gap between the cost of new and existing homes with similar assets, Miner said.
Miner said that in his experience, “new construction has never been priced so close to existing.” The gap will likely widen again once builders use up the lots they have and begin having to purchase pricier plots again.
Baessler is also able to build homes on sizable pieces of land and keep the price on the lower end in rural areas.
In Ault, for example, a buyer could purchase a home on one or two acres of land for about $210,000. That purchase price is lower than the median price for a home within the city limits of either Fort Collins or Loveland without acreage attached.
In addition to the construction underway in the region’s smaller communities, Baessler also has about 20 homes under construction in Greeley right now, Miner said. The company only builds pre-sold homes, but does have one model home in the St. Michael’s Square neighborhood.
Baessler’s total will be about 50 percent larger than last year, according to Miner. In all of 2012, the company completed 60 homes. This year, it is on pace to complete 90 homes.
Park Place Homes is also busy in the St. Michael’s area of Greeley, as well as in Evans and Eaton, according to Lindsey Bustamante, a broker representing Park Place. The company is on pace to potentially double its 2012 construction.
Park Place’s homes start at $190,000.
Last year, Park Place completed and sold 16 homes and was “thrilled,” according to Bustamante. This year, the builder is on pace to complete between 25 and 30 homes.
Bustamante said that part of the motivation for building in a town like Eaton is as simple as the feeling of the community.
Those in charge at Park Place are attracted to “feel good” communities, Bustamante said. Eaton is seen as a good small town to have a family that is in close proximity to employment in larger cities.
The company usually keeps at least one speculative home under construction at all times, Bustamante said, which allows for potential buyers to look at a real home, rather than just blueprints.
Those speculative homes usually end up selling toward the end of the construction process, according to Bustamante.