The Denver metro real estate market continues to present unique challenges for sellers and buyers. The surging Colorado economy has contributed to records in average sales price for single family homes across the seven-county Denver metroplex. In the broad brush, we understand it is a strong seller’s market. In closer examination, we actually see two vastly different marketplaces as 2016 begins —
1) Homes priced less than $585,000 represent about 60% of the available inventory and about three weeks of inventory as of January, 2016 (that is, if there were no more properties to come on the market today, all the houses on the market would be sold in about 18 days), and;
2) Homes priced above $585,000 represent 40% of available inventory with an approximate nine months’ absorption of inventory. Far from a strong seller’s market, but better than previous years.
It is intriguing to note how Luxury markets are typically defined in the industry. They are not defined by a specific price point — as most consumers think — but rather the top 10% of closed transactions by price range for a given geographical area. For 2015 in the seven metro Denver counties, the 10% of closed transactions bounced just below this $585,000 figure, depending on the month. To be sure, in a buyer’s eyes a home priced at $585,000 in one metro community might be regarded as “luxury” where the same priced home in another neighborhood isn’t even close. Based on REColorado data, closed transactions for properties from about $585,000 to $749,999 tripled over the same period a year ago and accounted for 11% of all, while homes closed between $750,000 and $999,999 accounted for 3%, and from $1 million to $3 million, 2%. This latter range is what most consumers consider “luxury”, but the marketplace is actually much deeper.
The point is, for buyers, strategies are different in the varied multiple markets of the Denver metroplex. Below $585,000, buyers most likely will compete against numerous other offers, with offers easily at or probably above the list price. Opportunities to present unique features in offers need to be considered and included to stand out and be noticed. Above an asking price of $585,000, buyers can typically be a bit more patient and selective — again, subject to neighborhood — potentially offering less than the asking price (but not as much as in previous years). Not every home is going to sell in a day and not every neighborhood is attractive.
The process to a new home can be a roller coaster ride. It is incumbent upon real estate professionals to educate their clients on how to emotionally position themselves as favorably as possible from a seller’s perspective to sanely achieve their objectives.