I went through an interesting exercise last month for a client of ours. They were selling a three-million-dollar home and they thought that the perfect buyer would come from a specific area of Colorado. We also surmised that the buyer for this home would most likely be what we call a “move-up buyer,” or someone who is currently selling his home in the one- to two-million-dollar range and is looking to move up to a three-million-dollar home. So we embarked on a phone call campaign to contact all the active sellers currently on the market between one to two million dollars. We called about 70 agents who had those active listings in two specific geographic regions. The result of the phone calls was a bit of an eye opener. We found out that:
- Eighty percent of the sellers currently on the market between one to two million dollars reported that they were looking to DOWNSIZE, not upgrade. These people were living in 6000-10,000 sq.ft. homes and did not want that much floor area any more.
- About ten percent of those same sellers reported that they were moving out of state for job relocations.
- About five percent reported that they were selling because they were in the midst of building their dream home. Interesting note: Most of the people who were building their dream homes were doing so on large acreage (35, 55, 135 acres).
- The remaining five percent were selling for a variety of different reasons.
What can we glean from this data? If you’re a builder thinking about jumping into the market again, don’t build big. There is still a clear movement away from the McMansion. In fact, if I had to ascertain a sweet spot in the market, it’s clearly for empty nesters that want to downsize. We have a number of clients who are living in large homes as just husband and wife. They would love to move to a smaller high end (800-1M), lock-and-leave type of product, but it just does not exist at this time. There are some developments on the outskirts of the city but not any or close enough to Denver.
If you do know of or are building a high end product for people looking to downsize, please contact us at the information below and we would love to see what you have to offer.