With so much talk of foreclosures, short sales, tax credits and interest rates sometimes it’s easy to forget about the luxury home market in Boulder. The luxury home market, where interest rates don’t matter as much as the state of the stock portfolio.
Not surprisingly, the luxury home market peaked in 2007. That year there were 215 homes or condos that sold for over $1 million in Boulder County. Then credit got tight, and the bubble started bursting in 2008. Many of the buyers who buy luxury homes in Boulder, choose Boulder after making their money elsewhere. When the bubble burst on the coasts many of those potential buyers were stuck with homes that were not selling or had lost significant value. When the economic crisis went into overdrive in the fall of 2008 stock portfolios lost value and some people realized that their dream to live in Boulder needed to wait.
Just over the last few weeks I have noticed a number of high priced listings going under contract. Here is what I see happening now in the Boulder area luxury home market.
Quick Facts about the luxury home market in Boulder County:
- Currently we are at a sales pace of just about half of the peak year of 2007.
- Through October 13th, there have been 105 sales of homes or condominiums in Boulder County. This represents 3.5% of the market.
- Currently there are 333 properties on the market above $1 million. This represents about 12% of the active market.
- Right now 5.4% of luxury homes on the market are under contract. That is 8 homes have buyers and contracts to close in the near future and 315 homes are listed for sale and do not have a buyer.
- The current inventory of homes on the market represents a 21 month supply.
- The value of homes under contract right now listed above $1 million is $32,195,500.
- There are currently 3 homes under contract above $2 million with the top listing price at $3,450,000.
- The top sales price of a home this year so far is $4,450,000.
- The average negotiation off of list price averages 8.2%.
- 90 of the 333 homes on the market were built in 2007 or after!
That last number is a big one. Frankly, when 400 homes over $1 million sold in 2006 and 2007 many builders, developers and investors did the math and thought that they could cash in if they too built a luxury home and sold it. The problem was that the demand was cut in half and the supply kept growing. Building a luxury home or condo doesn’t happen overnight and while they were designing and building the market changed.
The 333 homes on the market doesn’t include the homes that have tried the market and have decided to rent it out or wait it out. There are a significant number of homes that do not show up as active but would love to sell if the market would allow.
Going forward, I see more of the same. There will always be buyers for Boulder’s luxury homes. Boulder is a desirable place to live and the homes available are attractive. Many buyers of luxury homes defy the general economy. While others sweat an interest rate jump, some luxury buyers float well above the fray. Ready to write a check for what they want, when they want it.
It will take quite a while for the inventory to meet the demand so the stability of prices depends upon the wherewithal of the individual owners. Those who are in distress or in a hurry will need to offer their homes at a price that is really low. Below replacement cost, below what they bought it for, below what the neighbors paid… Buyers who are lucky enough to come upon one of these sellers will reap the rewards in the future. If too many sellers have to sell quickly market prices will begin to fall. We have already seen this happening. So far this year the average negotiation off of list price for a home in Boulder County under $1 million is 3.2%, for those sales over $1 million it is 8.2%. These figures do not include prior price reductions.
The property photos included in this post are of 772 Circle Drive in Boulder. It is listed by our company for $5,900,000 and is absolutely beautiful. For more information about this property go to www.772circle.com.