When you’re thinking about building a house in Colorado, you’re likely considering a location near Denver, Boulder, Colorado Springs, Aurora, or one of the mountain resort communities like Breckenridge, Aspen, or Vail. Whether you want a home in a resort area, a city, a smaller town, a suburb, or a rural area, Colorado is among the top 15 most expensive states to build a home. The average cost to build a home in Colorado is $220,944, according to GoBankingRates. While labor costs in Colorado are lower than they are in nearly 25 states, the state is known for its high-cost housing market.
Approximately 5.81 million people live in Colorado, with approximately half (nearly 2.9 million) of them living in Denver. The average cost to build a house in Denver is $288,698, with a typical range of $124,643 to $476,188, according to HomeAdvisor.
Multiple factors influence the cost to build a house in Colorado, including location, the size of the house, the materials for construction, and the finishes and fixtures you choose.
Custom vs. Production Homes
How much personalization you want will also influence the price you pay to build a house in Colorado. A custom home typically costs more than what’s called a “production” home. A production home refers to a house designed and constructed by a builder as part of a cluster of homes or a planned community. When you build a production home, the land, labor costs, construction materials, permit fees, and inspections are wrapped into the price of the home.
The cost to build a custom home in Colorado varies more widely than the cost of building a production home. In most cases, you pay for the land, architect, and construction separately. In this article, we’re focused on production homes.
Step-by-Step Process to Build a House in Colorado
The time it takes to build a house in Colorado depends on a variety of factors but averages about seven months. To build a house in Colorado, you’ll need to take the following steps.
1. Develop the budget for your new home
Every real estate transaction starts with a financial plan. Whether you own a home now or are renting, you need to know how much you can comfortably afford to pay for your monthly housing costs. In addition, you’ll need to evaluate how much cash you have available for the upfront costs of building a home in Colorado.
Once you have a target budget in mind, contact a lender for a mortgage preapproval. The earlier you do this, the better because you need to know your price range to shop for a new construction home. In addition, if any credit issues pop up, you may need time to fix them. Your preapproval letter can be from any qualified lender and doesn’t commit you to work with that lender. You may want to switch lenders after you choose a builder if that builder has a preferred mortgage company.
The average price per square foot to build a house in Colorado ranges from $150 to $250, which means that a 2,500-square-foot house would cost $375,000 to $625,000. However, costs can be considerably higher in sought-after housing markets such as Denver, Colorado Springs, and resort towns.
When you build a house in Colorado, labor costs represent 30 percent to 60 percent of your total expenditure. Materials cost 30 percent to 50 percent, and permits and other administrative costs run 10 percent to 25 percent.
Among the most expensive parts of building a home in Colorado are the lumber and the roof. Lumber costs range from $25,000 to $65,000 depending on market conditions and the size and style of your home. Roofs typically cost $1,000 to $3,000 or more, and insulation can cost as little as $0.10 to $1.00 per square foot. Depending on the type of siding you choose, it can cost $2 to $15 per square foot. Your interior finish choices can also impact the price to build a home in Colorado. For example, flooring can cost $1 to $5 or more per square foot.
In addition to estimating the overall construction costs for your new home, you’ll need to include homeowner’s insurance and property taxes in your housing budget. Homeowner’s insurance in Colorado costs an average of $3,956 per year, according to Insurance.com, coming in higher than the national average of $3,144. On the other hand, the property tax rate in Colorado is among the lowest in the country at 0.49 percent, according to SmartAsset.com, with an average property tax bill in of $1,437. But each county in the state has its own rate and method of assessing property. You can ask your lender or your builder for an estimate of your property taxes.
Depending on where you build your Colorado home, you may need to pay homeowner association dues. Those fees vary widely depending on the community amenities and the location.
As part of the budget process, you’ll need cash for a down payment, typically due when you sign the contract to have a home built in Colorado. You may also need cash for closing costs, although some builders pay those costs if you finance your home with their preferred lender and work with their preferred closing company. Closing costs vary by jurisdiction and average 2 percent to 5 percent of the purchase price of the home.
2. Choose your builder
After you have a price range in mind to build a house in Colorado, you can start your builder search. You can typically start online by looking for new communities in the location where you want to live and visiting websites for those communities. You can tour model homes virtually and in person and compare floor plans to get a sense of what you can afford to build in Colorado. Meet with sales professionals, talk to homeowners, and check reviews on a builder at TrustBuilder®.
3. Arrange your financing
While you should have a preapproval for a mortgage in place when you finalize your choice of builder and the community where you want to build a home in Colorado, you’ll need funds for your down payment to finalize your mortgage documents. Many builders have a list of preferred lenders or a mortgage company affiliated with their company. If they do, the builder may ask you to get loan approval from that company. You’re likely to want to finance your home with the builder’s lender, but you can also consult other lenders for a comparison of rates and fees. Your builder’s lender will have experience with financing a newly built home in Colorado and will be more knowledgeable about the new home construction process. Your builder also may offer an incentive such as paying closing costs or including an otherwise optional feature in your new home to encourage you to work with their lender.
In Colorado, your deposit to build a new home can be a few thousand dollars to 10 percent or more of the purchase price depending on the builder. If you upgrade your new house with options that are more costly than usual, your builder may ask you to pay for those separately rather than include them in the price of the house.
If you need additional cash, you may qualify for state and local homebuyer programs in Colorado for down payment assistance, which can be found by searching DownPaymentResource.com.
4. Match your lot and your floor plan
While you may find a specific lot with a view that you want, you should talk about your choice with the sales professionals on-site. Some lots require you to pay an extra premium. In addition, not every floor plan can be built on every lot in a community, so you may have to compromise on either the house or the lot. Remember when you’re building a house in Colorado, you’ll need to match your budget with the lot and floor plan you prefer. Be sure you know which features are included in the floor plan and which are optional, so you’re not surprised when construction begins.
5. Consider the local climate
Depending on your location in Colorado, you’re likely to experience extreme weather, especially heavy snow. Your builder can help you make choices that will stand up to the weather, perhaps including a specific style or material for your roof, extra insulation or higher-quality windows. Colorado is in Zone 1 for radon, which indicates the highest risk, so the EPA recommends using radon-resistant construction techniques and installing radon mitigation systems in newly built homes in Colorado. The Buyers Guide to Resilient Homes also has useful information for building a home that can stand up to the state’s extreme weather conditions.
6. Be aware of permitting and inspections
When you build a production home in Colorado, your builder will obtain all building permits, meet code requirements, and arrange necessary home inspections. There’s no statewide building code in Colorado, but local jurisdictions have code standards that builders must follow. When you build a home in Colorado, you can hire a third-party home inspector in addition to the inspections your builder must pass. However, you should consult with your builder about when it’s appropriate to schedule any outside inspections.
Overall Timeline for Building a Home in Colorado
The step-by-step process to build a house in Colorado takes an average of seven months. However, the exact timeline for building your house will depend on a variety of factors including the weather, the size and style of your home, whether the materials needed are available, and any possible labor shortages. Your builder will manage the timeline and keep you informed of their progress from contract to closing.
Michele Lerner is an award-winning freelance writer, editor and author who has been writing about real estate, personal finance and business topics for more than two decades.