There is no question that Denver enjoyed a good summer selling season. The combination of low inventory, good prices, low interest rates, and pent up buyer demand has most brokerage firms well ahead of last year’s numbers. Even the luxury market made good in roads at moving product and reducing inventory.
If you look at the data from Metrolist this summer, you’ll see that the sweet spot in the luxury market was 1 million to 1.5 million dollars. That is the bandwidth where the majority of sales occurred. When you get over 1.5 million dollars, you see fewer and fewer sales and when you get over two million dollars, it really gets quiet. What does that suggest about buyers?
I think one can conclude the following:
A) The reason why the 1 million to 1.5 million dollars is moving is because the buyers in that price range tend to be corporate vice presidents, directors, and those belonging to senior management. This mid to high-level job has a pay scale associated with it that would enable someone to buy a one-million-dollar home. This is also a very active position, meaning, companies are frequently adding and subtracting people in this category. That means a lot of buying and selling of homes in this price range.
B) The buyers for two million dollars and up usually are CEOs, COOs Chairmen of the Board, or high-level entrepreneurs. The activity in this job sector is not very active and most likely will not be very active anytime soon, which is why homes over two million dollars can be on the market for a very long time.
C) Some homes over two million dollars like those in the mountain properties were most likely second homes. The second home market has been extremely slow for the last few years but we did see a pick up in sales there as well this summer. A lot of the deals being snapped up in the second home market were foreclosures or deals that were just too hard to pass up. That’s ok because the inventory needs to be absorbed so we can get to stable pricing.
In conclusion, if I had to rub my crystal ball for the rest of the year in the luxury market, I would say that the 1-1.5 million dollars bandwidth will continue to lead all luxury sales. Special situation foreclosures like a nine-million-dollar home for 3.5 million dollars will sell, and private sellers with equity that just want out will continue to move. Happy shopping.
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