4% Interest Rates?! Some Denver Builders Are Pulling Out All The Stops. What Should You Do If You’re Considering Buying a New Home.

John Wilkinson (00:02)
Hey everybody, welcome to the Getting Real Estate podcast from the Living Colorado team. I'm John Wilkinson.

Kenda Ruck (00:09)
And I'm Kenda Ruck.

John Wilkinson (00:10)
Yeah, it's good to have you all here. Today we're talking about new construction and the pros, the cons, and there is a 4% mortgage rate out there, which is crazy because rates are right around 7% today. it is September 17th, 2026. That could change, in a week.

I don't think it's going to, but you know, there you go. new construction builders are are offering a 4% rate right now, which is really amazing. and today we're asking the real question: is new construction actually a better deal for you right now? and could it be right for you? by the end of the episode, we hope that you know exactly where to go next in terms of new construction or getting a resale.

Kenda Ruck (00:54)
Yeah, John, this is such an interesting topic. And I think it's so important for people because the market is a little strange right now. It's definitely a buyer's market, but it's a little strange right now in that a lot of people are so nervous about getting a new home because the interest rates are so high. So I saw this article in Realtor.com, which is a really great trusted resource that I use a lot for my research.

And they were noting that new construction. country the country rates at around four percent. And it really stuck out to me for two reasons. Number one, because we had a buyer who just closed on a house, new construction, and her rate landed around that area. And also this realtor.com.

Article mentioned Denver specifically and broke down how this is really happening a lot in Denver. So caught my attention. We had a different episode planned for today, but we kind of pivoted because we feel like this is very important information for all of the buyers out there to have. This is happening. Builders are not reducing the prices of their homes, but they are focusing on a different.

Area to discount their homes, and that's the point of entry in that monthly payment. They understand that that's the pain point. So we did a little bit of research, and Lenar's incentives average over 13% of the sale price last quarter, versus historically they were at 5%. And I thought Pulti was really interesting. They went from around $20,000 in incentives per home to $52,000 of incentives.

for a new construction home. They are hitting this hard.

John Wilkinson (02:43)
Yeah, you know, and I think, you know, people ask why payment instead of price. You know, I think everybody as a consumer, you know, I know I shop for things depending on what it's going to have, like the real impact it's gonna have on me monthly, right? Or any family that's out there probably does the same, especially when you're looking at buying a home, which is gonna be the biggest purchase you'll make in your lifetime.

And with the housing inventory that's out there now here in Denver, it's it's at a record high. So it is a buyer's market, and builders are able to change their program in order to attract these buyers. You know, it can change a monthly payment, three to five hundred dollars per month, right? And builders don't want to reduce the price because then

it impacts all of their future lots in the f it you know as they continue to build out neighborhoods. So it kind of makes sense that they're offering these low interest rates

And I think that's obviously works for the builder and it works for the buyer because their monthly rate or monthly rate, you know, that they're paying is gonna be less than they would on seven percent when they get a resale home.

Kenda Ruck (03:48)
That's that's exactly right. I think this article that I read, it was really fascinating because it talked about like say you have a six hundred thousand dollar house and it's in this builder's inventory and they really need to get it moving because it's just sitting there. They could reduce it, you know, twenty or thirty thousand dollars, right? But say they reduce it thirty thousand dollars. That's great. Okay, that spread out over thirty years is

kind of insignificant in the monthly payment. And I think a lot of buyers right now are saying, hey, I I I have to look at what I can afford this month, not, you know, over the long run. So I have this amount of budget and these are my expenses. And what can I plug in for the mortgage? If they just buy down the percentage rate one point, it costs them about 2.3% of the purchase price of the home. So that's

$14,000 as opposed to $30,000 if they lower it $30,000. And that makes a significant difference to the monthly payment. So what you just said about, you know, that the the sales price remains the same. And that is what is, you know, the the sales price that they're going to get taxed on, the sales price that their their appraisal has to meet.

But it's also the sales price that they have to hit when they go and turn around and sell their home in order to make sure that they r are able to recoup the money. So it's working. And it's it's really fascinating to me. Like I'm interested, you know, it's similar to what Greg and I did when we bought this house. we went new construction because of the mortgage rate and our buyer that just closed this week.

Her budget increased almost a hundred thousand dollars when she was looking at a four percent rate as opposed to a seven percent rate. That is significant.

John Wilkinson (05:50)
It is significant. Yeah. And I think that's that's where people are, Obviously, we always recommend that people work with a mortgage broker, a mortgage lender to find out what your f all in payment is going to look like at

specific rates that are out there. You know, but you're right. When you look at 7% that's today for, you know, typical mortgages versus a 4% or sometimes lower, you know, they have these builders can also have programs where you can start out at, you know, 3.2% and then end up at 4.2%, which is still incredible.

Kenda Ruck (06:21)
That's right.

John Wilkinson (06:23)
But that interest rate difference makes a a big impact on their monthly payment. And I know mortgage brokers, mortgage lenders that we work with,

definitely help our buyers understand what the impact is to their monthly budget, which is super important. Right. Yeah.

Kenda Ruck (06:38)
Long term. Yeah.

John Wilkinson (06:40)
you know, so let's look at price versus value. You know, why, you know, when when people go shopping, and we're gonna talk a little bit later about some of the neighborhoods here in Denver that have new construction, you know.

I think there is obviously there's certain neighborhoods people want to live in. Not all neighborhoods have new construction or builders that are offering these incentives. So I think that it'll be kind of interesting. But let's talk about like when when walking into you know a model home, it feels so good, right? It smells good, it feels good. You kind of envision yourself like, man, I can totally kick up on that couch and and watch, you know, television, whatever.

just amazing. but it's not an accident that those model homes feel so good. It actually is by design.

Kenda Ruck (07:25)
Yeah, absolutely. We did a little bit of a deep dive into the psychology of these model homes. And it's fascinating and it's brilliant, really. when you walk into a model home, the first thing is it's bright and airy and it's brand new, and there's there's no there's no wear and tear on the carpet, and it smells great, and no one's ever lived in it, but it's set up to psychologically

cause you to immediately picture yourself living there or your family or your children. And it's done very intentionally. And I think it's brilliant. That's one of the reasons why you and I are such proponents of staging homes that we sell, like existing homes, staging it because there's a huge psychology and subconscious draw when you walk into a home and you can kind of picture yourself in that home. So

The other thing is that the sales representatives are so amazing and they're so friendly and they're so welcoming and they let you fall in love with the house and and they can form immediate connections with you. And I think that that makes you feel like, my gosh, I'm gonna love my neighbors. I'm gonna like this this neighborhood has super cool people, you know? And it's it's intended.

to give you that feeling and they're very good at it. And I'm not saying there's anything wrong with it because it's brilliant. I think it's it's brilliant. And we try to capture that when we sell an existing home.

John Wilkinson (09:00)
Yeah, absolutely. I mean, there's such a difference between seeing a seller's clutter, you know, in a house versus walking into one, a staged home that that, you know, obviously it's we recommend highly for sellers who are out there to to get it professionally staged because it does make a difference. Obviously, these model homes, they they the builders, they know what they're doing with the models.

And getting them decorated the way they do, because it's that it's the price versus value kind of conundrum. What we recommend always, especially when working with new construction, is go into the model home. It's great. But it also all has all of the upgrades or a lot of the upgrades that are being

Kenda Ruck (09:39)
Yep.

John Wilkinson (09:41)
offered by the builder. And the price that's being shown is typically the base price, right, for the home. So

Kenda Ruck (09:47)
That's right.

John Wilkinson (09:47)
it doesn't include all of these extra upgrades.

You know, et cetera. So go in with the the mindset of, hey, this is great, this is nice, I can see myself living here, but really look at the quality of the home as you would with any resale home, whether it's staged or not. it's really kind of looking at stripping it back down to, you know, the the basis of the home. Is this a floor plan that you like? Does it flow well?

try to imagine, you know, your furniture in there. but you know, the builders do a great job of of staging themselves, right? And and getting that home sold. And that's kind of the same thing we do with with any resale home.

Kenda Ruck (10:26)
I mean, you just nailed it. I mean, it is it is so important to actually understand what you're really getting if you decide to buy that home. And so I think the most important takeaway there is to is to make sure that you're getting a deal, not like buying a feeling, not buying this dream of what you want your kitchen to look like when you're preparing Thanksgiving dinner or whatever. You know, you have to really look at what

What if like you said beautifully, what will my furniture, my ratty couch with my dog

John Wilkinson (10:59)
Yeah.

Kenda Ruck (11:01)
who lays on it, all that, you know, what's that gonna look like in this house? And does this floor plan work? And when I go to model homes with my buyers, I love taking them because they can walk around and fall in love with it. But I am always in the back of my mind looking at, okay, that's an upgrade, that's an upgrade. And I always ask the sales rep, please point out to us what.

the upgrades are as we walk through this house and what the base model looks at. So you you just nailed it by saying always make sure you get the base model. And if you take a your realtor with you, they can maybe a little bit less emotionally like distance themselves from the beauty of the home and help be that rational person for you, even though you fall in love.

John Wilkinson (11:47)
Totally.

Yeah, totally. having the agent kind of help the buyer, us helping buyers walk through homes and really understand the pros and cons of of a space. And it's it's just like the rate. So like when is the lower rate good or not good? When does it when doesn't it actually make sense for somebody? You know, there's a nuance most people don't hear.

really until it's too late that the rate by buy down doesn't make sense for everyone.

Kenda Ruck (12:18)
It doesn't. Yeah, it doesn't. There are situations where when you run the numbers and and let people who understand the numbers help you run the numbers, it's the break-even you end up at a loss. And one of those very specific situations is when you're only gonna be in the house for two to three, maybe four years max.

If you know that you're only going to be in that home for a few years, you need to have somebody sit down and run those numbers for you. with our recent buyer, you know, she's planning to be in the home 10 years until her children graduate. So we knew that, okay, yes, in this situation, we ran the numbers, this this lower rate makes sense for you. But there are other people who will be leaving the ho home sooner. And let's just let's just

walk through this scenario. Say you buy a house and you you pay six hundred thousand dollars for it and you get that lower rate. Great. You're saving, you know, six six hundred dollars a month, let's just say. and then two years from now you get transferred and your job takes you somewhere else and you have to sell the house. That same seller is just down the street selling brand new homes in your model that are staged and attractive.

And they're also the same price, and they're also offering this low interest rate. How do you compete with that home? There's only one way you can compete, and that's lower your price. And that's where it ends up biting you in the fanny because, shoot, I can't get my money back out of this house.

John Wilkinson (14:02)
Yeah, sometimes, you know, I I guess in those situations, if somebody knows they're not gonna be there for like ten years, right? and life happens, anything can happen. But if you kind of have an idea like, hey, this is not one my forever home, or something I'm gonna be in in here for five plus years, sometimes it may be good not to take that rate buy down and maybe take the incentive and have it paid towards closing costs, right?

Kenda Ruck (14:27)
That's right.

John Wilkinson (14:27)
Or some of the upgrades because

then at least you're you're getting an incentive, but Obviously it's not gonna affect your your monthly payment. but you have more flexibility in the short term to gain your money back and kind of go through more traditional financing. I think that's you know, that that is something that I think we as as brokers, agents, need to do for our clients is really walk them through not just the next, you know, two years, but really considering

long-term planning. and that's in and that's important. And obviously talking to their, you know, financial advisors or or or or the like, really thinking about how is this going to impact me financially in order to make a right decision.

Kenda Ruck (15:13)
Yeah, and I'm so happy that we work with two really very thoughtful, devoted mortgage brokers who w will sit down and run those numbers for us because it is complicated, it is nuanced and it's hard to know exactly what situation is gonna work for you, but we we can help you run down those numbers and and I I

I also want to make sure, and I want to say this very carefully. I want to make sure that people understand one other difference about working with the agent in the model home versus work taking your own agent with you.

one of the things I do for fun is I go around to all the mo model homes and I meet the agents and they're all amazing people and they're trustworthy and they're great people and I enjoy working with them. But there are a few differences that you need to be aware of. Number one, the contract, if you do decide to buy, the contract is not the Colorado approved contract. So you need to have a realtor who helps you very carefully read and understand.

That contract. And if there are any questions or any problems that you see in the contract, you need to get legal advice. because it has not, it is not the Colorado contract. The other thing that I've been shocked to know is that as I go around, I ask people, are you a licensed real estate agent? And none of them are. They cannot be. They are not allowed to be. If they were representing the seller, they are not allowed to be.

licensed real estate agents. I even met one who was a licensed real estate agent and he had to terminate his license. So I think that's significant. And John, again, we're not saying anything bad because these people are great. But explain the difference of working with a licensed real estate agent who's bound by the laws of Colorado and working with a sales rep who works for the seller.

John Wilkinson (17:17)
Yeah, you know, I think looking at it from this perspective, right? The sales reps in the model homes work for the builder. It's like they're they're working on behalf of the seller. When we walk into a model home, or anybody as a consumer walks into a model home, they're looking for something, you know, for their family. they're on their own. There's nobody representing them and their interests in that in that transaction.

And the sales agents are great. They're super nice. I've I've family that that does that for a living and they're great people. They're not here to to really do anything maniacal or shady, you

Kenda Ruck (17:59)
Shady. Right. Yeah.

John Wilkinson (18:01)
know, or to somebody.

But they are there representing the seller, and the seller's interest is to make money, right? And so they're going to do whatever they can to make the most of a transaction. And there's more than just the financial aspect. A realtor can you know what we do with our clients is walk them within the model home and ask the questions you had mentioned earlier. Like, can you point out the upgrades? But beyond that, it's also looking at the contracts. And as agents, as brokers, you know, we've we know

the real estate laws here in Colorado and what is is is right, what is wrong. and we can help guide. That's our our job is to to act as as fiduciaries for our clients and and represent their best interests in things. And so I think, you know, just knowing that, right? If you're going out to a model home or community, it's fine to go on your own. It's fine to go look at the places

But I just recommend that before you sign anything, before you do anything, you know, to definitely talk to a real estate agent because they're going to have your best interest at heart. And and that's really what you know our job is, is to take care of our clients.

Kenda Ruck (19:11)
Right. Can you explain what the a fiduciary responsibility is?

John Wilkinson (19:17)
Yeah, so it's basically making sure that from a financial standpoint, they are getting the best deal. Right. We have obviously a confidentiality that remains in place where you know we can talk to them about their monthly budgets, their in their their really their whole financial outlook, right? And so look making sure that we are in being entrusted with and caring for their financial.

situation is kind of what a f what fiduciaries means. And that's just one thing, one of the the the responsibilities of a real estate agent is to make sure that that we're doing that on behalf of our clients.

Kenda Ruck (19:59)
And I think it's significant that one of our rules is also that we are sworn to do is to always act in the best interest of our client. And that is our like legal fiduciary duties to always act in the best interest of our client. And I think I always have this saying in the back of my mind that is I don't know what I don't know. And I think of that, that that has come to my mind as I've been

doing deep dive into this this model home and new construction contract situation. And if I were a buyer and I walked into a model home, I don't know what I don't know, right? And so you may not know to ask certain questions. And so you know not to toot our own horns, but we are real estate brokers and we care very deeply.

about the best interests of our clients. So and and in most situations, you know, it's not a situation where you're gonna have to pay your real estate broker. The usually the builder will pay that for you. And you can have somebody representing you and your best interests. And it in most cases doesn't cost you anything. So why not?

John Wilkinson (21:20)
Yeah.

No, a hundred percent. You know, you t the whole thing about you you don't know what you don't know. You know, there are things you can do with new construction homes that a lot of people don't know about. And that's, you know, pre framing, you know, inspections, making sure like

the the plumbing and anything that's coming through the foundation is it looks right, that there's no you know issues with the foundation itself or with the plumbing, you know, all the way through kind of post, you know, pre-drywall inspections. I mean, there's a lot of things that agents can help coordinate beyond. And it goes back to your thing of like you don't know what you don't know. We've done this for for some time now and that's our job is to help guide.

you know, guide people through.

So there's

a couple of communities out there I think that you should know that that are out there. Re Reunion and Green Valley Ranch on the more affordable end of the spectrum. And then there's Candeles and Crystal Valley for move up buyers. then there's Painted Prairie and where you live, Sterling Ranch, that

Kenda Ruck (22:23)
Mm-hmm.

John Wilkinson (22:24)
span a wide range of price points for sure.

Kenda Ruck (22:27)
Yeah. I I mentioned earlier that I go around to to the different models and to talk to the the sales representatives and I always ask them like say Taylor Morrison, this is what your price range is for Sterling Ranch and for the different communities in Sterling Ranch and they have a they have a variety or Richmond Homes,

but then I always ask them, okay, what other developments are you building in? And so they'll tell me the different developments and where they're building and the different price points, because some in some developments they build a more entry-level, more attainable home. And then in other developments, they're building, you know, move up homes. and so if you really like the finishes that you see in a model home and the builder, but it's maybe not your

Price point exactly, or it's not exactly what you're looking for. Another great question is to say, hey, where else are you building? I like this builder, but this maybe this area isn't right for me. and so that's something to also consider. There are some cute neighborhoods, and we did a special segment about Sterling Ranch, and we'll link it in the in the notes so that if you want to watch that episode about Sterling Ranch where we talked about

Sterling Ranch, there's gonna be twelve thousand five hundred homes in Sterling Ranch. I mean,

John Wilkinson (23:45)
Yeah, yeah.

Kenda Ruck (23:46)
and it's every price point from like s five or six hundred thousand dollars all the way up to, you know, almost two million. So there's something for everyone here. but there are some really fun neighborhoods that are popping up, and it just depends on what you're looking for, whether you want that established neighborhood with mature vegetation like where you live, or you're willing to put up with the hassles of new construction like where I live.

John Wilkinson (24:11)
I know, but there's something great about that new house smell, that's for sure, you know, so

Kenda Ruck (24:14)
Ooh. I I

still I I asked Greg a couple of days ago, I said, Do you think our house smells like we have a cat? Do you think our house smells bad and we just don't know it? You know? And and and he's like, No, I think when I walk in I smell it still smells like a new house. It still has that new

John Wilkinson (24:30)
Yeah, yeah.

Kenda Ruck (24:31)
home smell and it's like a new car, like that new car smell, man.

bottle that and sell it 'cause it's the best.

John Wilkinson (24:36)
Yeah. I know. That

talk about like working your mind about, you know, for purchase, you know, it's that they know what they're doing for sure.

Kenda Ruck (24:46)
Yeah.

John Wilkinson (24:46)
so so let's talk about a little bit just, you know, and kind of wrapping up a bit, is is whether a new construction, you know, is right for somebody. what do you what what do you think somebody where some should somebody start or are there any pointers that you would

mention somebody should consider about new construction and whether it's right for them.

Kenda Ruck (25:09)
Absolutely. I think one of the most important things to do is is get pre-approved and know your budget. Know, you know, what you can afford, not the monthly payment necessarily, but also the long-term implications of what you can afford. And that's going to give you a little bit more leverage and so that you can go in and you know already, hey, this is what I can afford. And even if they throw this, hey, we've got this monthly rate, we can

you know, seduce you with you you get you're able to keep your head on straight. I think that's step number one. What about you?

John Wilkinson (25:44)
Yeah, no, that's great. I think also is talk to your agent before you go out there. Yes, you can go, like we mentioned, you can go shop and stuff, but a lot of times builders, if you're going to have somebody representing your best interests, builders want to know who that is on the very first visit. They don't necessarily have to be there with you. It's better if you know one of us does go with you on that first meeting. But making sure that you have those lined up, those conversations are done and you have

That representation lined up before you get to the home.

Kenda Ruck (26:17)
Absolutely. And the other thing that we do for our buyers is do research on the area to see what preexisting homes are selling for. So if you

John Wilkinson (26:27)
Yeah.

Kenda Ruck (26:27)
have homes that are selling same floor plan, same square footage at around 500,000, but they're asking 650, then we're gonna you're gonna know that going in if you talk to your agent and do that research before walking in on what other resale homes in the area are going for.

John Wilkinson (26:44)
Yeah, and that's super important. And I think last is making sure that you know, on that first visit, you know, you have that new home smell and the model looks great. Don't sign anything, you know. Yeah, pump the brakes. Yeah, exactly.

Kenda Ruck (26:54)
Yeah, pump your brakes. Just

John Wilkinson (26:58)
They they are trained, the sales agents are trained to sell. and they'll they'll offer all of these, you know, 24 hour incentives, or if you sign today, you get this kind of deal.

Trust me, our job is to negotiate on your behalf and we're gonna be able to get those incentives and maybe more when it's all said and done. So just take a moment to breathe, walk away, let the emotions, you know, settle and then have a conversation before making any decision. I think that's super important. No. And they still want to sell. Yeah, and there's lot more lots to build on. So yeah.

Kenda Ruck (27:28)
That's right. That model home is not going anywhere. It's it's there. It's not going anywhere. That's right. That's right.

John Wilkinson (27:36)
So back to like where we all started. you know, the 4% rate is real. it's obviously not automatically great for every every buyer. Again, we talked about, you know, whatever whatever your plans are for the future. We need to take those things into consideration. and we also need to figure out what community fits you best. We've talked about a lot on this podcast about different neighborhoods in Denver and how all of them have a different personality, a different sense of being.

And you need to make sure that the community fits you as well. So whether you've got someone looking out for you on your side or not, make sure that those are all things that you're taking into consideration when thinking about new construction.

Kenda Ruck (28:17)
Absolutely. And and the lowest monthly payment may not necessarily be the best deal. So you need to make sure that you really remove your emotional response and think through it. But I will say this, there are some pretty good deals in new construction right now. And they're

John Wilkinson (28:34)
Yes.

Kenda Ruck (28:34)
attractive. And I'm very intrigued. And I had a great experience with my closing this week working with this builder. And I would work with him again. So

it's intriguing. So if you have questions, if you're even considering new construction, maybe you're moving here and you want the house to be built when you arrive and you want to close when you arrive, put a little bit of money down as a down payment and get that new house built for you, reach out to us. We are happy to walk you through all of the steps, revisit each of these nuanced points that we shared with you today.

and connect you with a lender who can give you the real understanding of what this home is going to cost you short term and long term.

John Wilkinson (29:24)
all great points, Kenda Thanks so much. And if you have any questions about the process, just shoot us a message. We'll be we'll be glad to answer.

Kenda Ruck (29:32)
Yeah, like and follow our podcast. We also have a great website where you can get all sorts of information. It's livingcolorado team.com. And we've been doing a lot of really exciting work on that. So we'd love for you to check us out there.

John Wilkinson (29:45)
Yeah, thanks so much, everybody.

Kenda Ruck (29:47)
See you next time.