First off, a quick February snapshot of residential real estate in Denver: From 1985-2015, February has averaged 14,979 active listings. The Denver-area had a record high of 25,484 in 2006, and closed out February 2016 with a historically low 3,963 active listings – representing a six percent decrease in inventory over the previous month and 2.8 percent decrease year over year.
But, were you aware that there are several markets in Denver? The Luxury Market includes properties sold for $1 million or greater, the Signature Market describes properties sold between $750,000 and $999,999 and the Premier Market includes properties sold between $500,000 and $749,999. When talking trends in the Metro Denver’s Real Estate Market, it’s helpful to know what market you’re actually talking about.
Since there’s been a shift in the Luxury Market in Denver as of late, I thought it could be interesting to look at that one for this week’s blog. When looking at the market as a whole (not specific to your neighborhood or home) there are a few things that drive the pricing of homes. One is inventory, or, supply and demand.
Here’s a snapshot of Denver’s Luxury Market
|February 2016||February 2015|
|Luxury Homes Sold||56||50|
|Days on Market (DOM)||116||147|
|Price Per Square Foot (PSF)||255||277|
When we look at February stats (March has not been published yet) there were 56 luxury homes sold and 1910 homes sold total in the Metro Denver area. So, the luxury homes made up almost 3% of the total homes sold in February. When you look at what’s currently on the market in March, there are a total of 487 homes with an asking price of over $1.5M in the Metro Denver Area out of 5501 homes for sale total (or 8.8%). As you can imagine, the homes over $1.5 million constitute a small share of the market.
Also of note is Months of Inventory or MOI. Months of Inventory reflects an estimate of the amount of time it would take to sell all of the current listings in a given area if no new listings became available. Six months inventory is considered a balanced market between buyers and sellers and less than that is a seller’s market. Over six months of inventory- the negotiating power tends to favor buyers. Denver County just made the transition to a seller’s market in the Luxury Market, with 5.2 months of inventory.
That said, these homes are certainly not experiencing the buyer feeding frenzy that we are seeing related to homes under $550K, so accurate pricing is a lever to prevent more days on market. Word on the street is that some agents have surprisingly been experiencing multiple offer situations on some luxury homes which has not been the case, generally speaking, the last few years. You may have heard of a huge surge in the number of Luxury Market homes (50%) that went under contract in their first 7 days in February due to a close out of new construction properties in Cherry Creek North. This is an isolated incident of course and much depends on the neighborhood and actual home.