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Larry Hotz, Kentwood Real Estate, Greenwood Village, Colorado

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You are here: Home / Denver Real Estate News / Luxury Real Estate Market Improving, But…

Luxury Real Estate Market Improving, But…

May 31, 2015 By Larry Hotz, Kentwood Real Estate Leave a Comment

 

Months of inventory for luxury Denver homes is declining quickly. But, it's till a buyer's market.

Months of inventory for luxury Denver homes is declining quickly. But, it’s still a buyer’s market.

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.

Luxury home sales above $1.5m jumped dramatically in May, 2015.

Luxury home sales above $1.5m jumped dramatically in May, 2015.

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

The Denver MLS, ReColorado, statistics for average numbers of months on the market before a listed home sells.

Denver MLS, ReColorado, statistics for average time on the market before a home sells is less than 1 month.

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.

Mid-Range homes priced from $500,000-$1m are still not selling as fast as typically priced Denver homes for sale.

MLS listings priced between $1m-$1.5 are selling in just under 8 months on average.

 

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.

Homes priced from $1m-$1.5 are selling more slowly.

Homes priced from $500,000-$1m are selling more slowly. But this is a balanced real estate market.

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Filed Under: Denver Real Estate News Tagged With: Denver luxury real estate, Denver MLS, Denver real estate Market

About Larry Hotz, Kentwood Real Estate

Larry Hotz is the team coordinator at All Denver Real Estate. He is also an active real estate broker at The Kentwood Company in Greenwood Village, Colorado. He lives in the Heritage Hills neighborhood of Lone Tree, a Denver suburb. He is an active member of the Metro Denver Association of Realtors and Metrolist, the local MLS.

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Copyright 2000-2020 by Loren Hotz. All Rights Reserved. Loren (Larry) is a Broker Associate of The Hotz Group at Kentwood Real Estate. Some articles on this real estate blog were written by Brokers employed by various brokerages including Kentwood Real Estate as identified. Unless otherwise identified, luxury Denver real estate market statistics were provide by the Denver MLS search company, ReColorado.