The luxury homes segment of the Denver real estate market priced over $1.5m is improving but still shows that the overall market is dramatically segmented by price range. Homes priced under $500,000 in Denver and the suburbs are selling quickly often with multiple offers in just days or hours.
Luxury Home Sales Jump in May
What a difference a month can make. I reported earlier that the Denver luxury real estate market had a whopping 18 months of homes inventory on the market based on April listings and sales. Now, May sales have revealed that inventory has been reduced to 12 months based on May listings and sales. That huge change change occurred in just one month but might signal a change in direction for luxury home sales here.
So what happened that could account for such a dramatic change in the number of months of inventory in such a short period of time. The simple answer is that the number of sales increased. Sales increased in May in the luxury category from 27 to 48 sales according to the Denver MLS, ReColorado statistics. Surprisingly, the number of listings also rose slightly from 498 to about 548. There was no significant change int he number of expired listings month over month.
Denver Luxury Homes Listings
While this really is a dramatic improvement month over month, the fact remains that the luxury real estate market is still categorized as a buyers market and the sample of homes is relatively small with only 550 listings on the market. A healthy market is generally considered 3 to 6 months of inventory on the market. A balanced market market is also one in which a listing in the would take 3 to 6 months to sell on average. Or, put another way, if no new listings were to come on the market it would take 3 to 6 months to sell all of the available inventory.
Denver MLS Statistics Show Market Segmentation
Compared to the number of months of inventory for homes priced under $500,000, the Denver luxury real estate market is still in recession. Those lower-priced homes are selling in less than 30 days on average. That market segment is frantic with buyers scrambling to get homes and bidding against each other with multiple offers. The result is that home prices are rising rapidly in that category.
This is dramatic market segmentation. Typical homes are selling very quickly. Luxury homes, while improving, are still languishing on the market for an average of 12 months.
But what’s going on in the middle? Homes priced between $500,000 and $1 million are selling more slowly than typically priced homes but faster than the luxury market as you might expect. The same is true for homes priced between $1 million and one and $1.5 million. Each of those segments has less absorption than typically priced homes under $500,000. Depending on which statistics you believe, the average priced home in Denver is now priced between $300,000 and $400,000.
The conclusion is obvious. There isn’t just one Denver real estate market. There are several. There are even differences in the markets located within the city of Denver, those in the suburbs and those in outlying areas. But that’s a topic for another article.
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