“Inman Connect” is a semi-annual, national conference for real estate agents. At the most recent gathering in June of this year, held in the beautiful city by the bay (San Francisco), we heard a lot of discussion of the luxury home market.
What is a luxury home? Are different strategies required when you are buying and selling in this market segment?
A common definition of “luxury” is that it is the top 10% of any market. It got us wondering about what that looks like in Denver. What is your guess – what is the home price that puts you in the top 10% of the market?
You’ll find the answer below, but make your guess first.
The answer for metro Denver is $525,000. Ten percent of the residential properties in metro Denver that sold over the last 12 months had an asking price that was above $525,000.
Does that surprise you? It surprised me. We thought the number would be higher.
Here are some additional facts. The cutoff for the top 5% is only $600,000. Move up to $1,001,000 and you are in the top 2%. If the digs you come home to every night has a price tag of $1.5 million, then 99% of the properties in the metro area are less expensive than yours.
The supply and demand pattern is different also. While houses with a price at $525,000 or above make up only 10% of the sales over the last 12 months, they currently represent 37% of the available inventory.
In other words, almost four out of every ten houses on the market right now has an asking price over $525k. This represents 7.8 months of supply – it would take 7.8 months to sell all these homes if no more came on the market. In contrast, there is only 1.5 months of supply for homes under that price point.
Traditional wisdom says that inventory of less than three months is a seller’s market while inventory greater than 6 months is a buyer’s market.
We see the effect of this large inventory in the time it takes to sell upper end homes. Half of the homes under $525,000 that come on the market will find a buyer within 11 days. Above $525,000, it is taking 80 days on average to find a buyer.
What does it all mean if you are in that “luxury” market of $525,000 and above? If you are a seller, you are in a bit of a buyer’s market. You have to be more accurate with pricing and your are very unlikely to have that multiple offer feeding frenzy that you hear so much about these days.
If you are a buyer, ditto. It is a bit of a buyer’s market. It is an excellent time to make a move up into this range, especially if the house you have to sell is in that heart of the market at $350,000 and below. You get to sell in a seller’s market and buy in a buyer’s market. In other words – it is pretty much real estate heaven.
Courtesy of Mike Cooke of Colorado Home Realty