Everything is relative including Denver luxury real estate. While luxury market is extremely robust, it cannot boast the kinds of numbers seen in the overall Denver market. The average home is selling within days or week of being listed art prices at or often above listing price. It’s not that crazy yet for the 1% of home sales priced above $1.5m.
Denver luxury real estate is selling very well by historical standards. But, it still counts for only 1% of all home sales. While those pricey homes are selling faster overall, some areas are selling more slowly. Those areas tend to the furthest from downtown Denver and have the most homes on the market. Slower selling areas include Castle Pines Village, Evergreen and parts of Parker, Colorado. Inner city homes are selling like hot cakes. Sometimes, they even sell above list price with multiple offers.
Denver Luxury Real Estate Sales Jump
Last month luxury home sales jumped in the 5 country metro area including the counties of Arapahoe, Denver, Douglas, Jefferson and Adams. Results for last month were 50% more than the year ago April time frame. Last year, luxury home sales peaked in the month of May with 42 sales. So far, this May has 14. So, the same pattern could repeat itself this May.
Home buyers in this price range are often moving to Denver from other states or even overseas. Some are also “move-up” buyers. They have sold homes in other neighborhoods and seek a change in lifestyle. Sometimes, that mean moving out to the suburbs so children can attend better public schools. It can also mean “Empty Nesters” moving from the suburbs back into the city to take advantage of more cultural and sports venues.
Days On Luxury Market Blips Down
Generally, luxury homes that are selling are selling in 2-4 months on the market. That’s quite a contrast from homes selling under $300,000. Those homes are selling in an average of less than one week.
It has always taken longer to sell more expensive homes. At the height of our last real estate recession in 2007-2009, luxury homes were averaging over 200 days on the market. Absorption rates were even more dismal. Absorption rate means the amount of months it would take for current sales to absorb all of the current inventory. Back then, the absorption rate was over 40 months! By contrast today’s absorption rate for the luxury market is a mere 10 months. That’s not a booming luxury real estate market like in New York or San Francisco. But, it is lowest Denver has experienced in years.
What’s the difference between days on the market and absorption rate. Days on the market covers only homes that actually sold. It would make sense that those homes are the best quality and value. Homes of lesser quality of value just do not sell. So, they are not counted into days on the market. Absorption, on the other hand, counts all listings whether they sold or not.
Homes Sell Near Asking
Many of my clients are often surprised that so many luxury homes still sell at or near the asking prices. There’s a good reason for this. Denver and most of luxury home sellers are not distressed. Most simply do not have to sell. So, most wait patiently until a buyer is willing to pay the price.
Again, in 2007-2009, sales price to list price ratios were frequently below 90% for luxury homes. Back then, many sellers were distressed. Sometimes they faced the possibility of foreclosure. Sometimes, they owned or worked for companies that were failing. Higher distress in the market causes lower sales prices.
Overall, the Denver luxury real estate market is doing well. It’s relatively in balance between buyers and sellers. But stay tuned. This too could change.