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The market for million-dollar plus homes in the Denver area perked up in June from its dismal showing a year earlier, with closings rising 19 percent and price discounts falling, shows a report released today.
But a separate report, shows that despite the improvements at the high-end of the market, during the first half of the year the “sweet spot’ for home sales remains homes priced from $100,000 to $300,000, which accounted for 61 percent of all sale in the eight-county area.
Both of the reports were released by independent broker Gary Bauer, who analyzed Metrolist Inc. data from Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, Elbert and Jefferson counties.
“In 2008 to 2009, we were in markets that reflected the large number of foreclosures on the market,” Bauer said. “After people started gobbling up the homes in the lower-price ranges as fast as they could, we started getting a better handle on the foreclosure situation. Now, we are seeing more activity in the $200,000 and $300,000 ranges.”
Luxury homes attractive to buyers
He said the same thing is now happening with luxury homes. And as banks take back expensive homes and sells them for deep discounts, those homes will start to see the type of activity that the lower-end market has experienced, he said.
“I wouldn’t go as far as to say that million-dollar market is poised to improve yet, but I would say it is stable,” Bauer said. A separate report by Coldwell Banker Residential Broker Colorado, also showed a year-over-year improvement, although not quite as robust as Bauer’s analysis. Coldwell Banker’s report showed 53 homes closing in June at $1 million or above, about a 13 percent increase from 43 in June 2009. Reports, depending on the methodology, can vary a bit. “We show basically the same trend of an improving market,” said Chris Mygatt, president of Coldwell Banker in Colorado.
In June, 68 single-family homes sold for $1 million or more, a 19.3 percent improvement in June 2009. And that is a 48 percent improvement from the 46 homes in the Denver area that closed in May.
The original asking price for a seven-figure home that closed in June was $1.9 million. But by the time the home closed, it had fallen 15.7 percent to $1.63 million. Still, that was better than the 23 percent drop from the original listing price of $2.1 million to the sale of $1.6 million in June 2009.
Of course, the original listing price may under-state the hit some homes are taking. For example, a 6,677-square-foot home in Castle Pines Village last month sold for $1.575 million. Its original asking price was $2.085 million. But public records show that in March 2008 the buyers paid $2.3 million for the home.
“I think we all feel like we survived 2009. Now, things feel like they are much better,” said Dee Chirafisi, a co-owner of Kentwood City Properties, and one of the top brokers in the Denver area.
Lion’s share of activity below $300,000
Bauer’s data shows that of the 16,149 closings in the first half of the year, there were 4,943 sales in the $100,000 to $200,000 range and 4,923 in the $200,000 to $300,000 range. Combined, the 9,866 sales from $100,000 to $300,000, accounted for 61 percent of the market. By far, the next biggest price strata were the 3,867 homes that sold between $300,000 and $500,000.
“A lot of that is from the tax-credits,” of $8,000 for first-time home buyers $6,500 for qualified current owners, Chirafisi said. “Because they extended the time to close those tax-credit homes to the end of September, those homes will also be reflected in July, August and part of September.”
In her office, she said showings of expensive homes are up 20 percent to 25 percent since the beginning of the year.
And she said many of the people looking are serious buyers.
“I think people looking at the higher end have seen prices adjusted enough that they figure it is a smart-time to buy,” Chirafisi said. “A year ago, sellers were pretty steadfast in their prices.”
She also said there is more financing available for high-end homes today than there was a a year ago. “There are more jumbo loans out there, and the interest rates are much lower,” she said.
Nina O’Kelley, a broker at Kentwood City Properties, put one home in the Morgan Historic District in Denver on the market on June 8 and she placed it under contract on July 2. The home was priced at $2.44 million.
She can’t say what the sales price was until it closes. The closing is scheduled for August.
“There was some give and take as there always was, but it was close to the asking price,” Kelley said.
She said there is a limited supply of homes in markets such as Country Club and Morgan Hill, so they might buck the overall trend for the entire market, a bit. “There are so few of those available, that you often have to act quickly to the get house of your dreams.”
Still, she said there is no doubt there are more well-heeled buyers shopping and buying expensive homes now than a year ago.
When stocks are down, even the rich don’t buy homes
“I think a year ago, people were looking at their stock portfolios, which were greatly diminished and they decided they really did not have the funds available to make a big purchase,” she said. “I think what is happening today is a reflection, in part, of a stronger stock market.”
And that’s why Jason Miller, of Milan Realty, doesn’t put too much stock in comparing today’s luxury housing market to a 2009 market.
“I would not read too much into the year-over-year sold numbers for June 2010,” Miller said in an e-mail. “In 2009, homes that closed in June most likely went under contract in April-/May 2009 when the stock market was still down 60 percent from the highs. Buyers in the 1 million-plus range tend to be more susceptible to the “Wealth Effect”. If you compare to 2008-2007, June 2010′s numbers are most likely way down.”
Also, if you look at average prices in those lofty prices, and use a three-month average price, and then break the sales into smaller subsets by prices, there will be so few homes in each category, that the numbers can easily be skewed by a handful of large sales.
Miller said he expects fewer sales this year than last year.
“Not a good sign for a recovery,” he said. “Active listings are up 10 percent, year-over-year and sales are down 30 percent. Not a good combination.”
County $100,000 and below $100,000-$300,000 $300,000 and above Total
Adams 318 2,056 246 2,620
Arapahoe 146 2,112 754 3,012
Boulder 16 650 1,001 1,667
Broomfield Zero 176 168 344
Denver 338 2,010 1,130 3,478
Douglas 1 996 1,115 2,112
Elbert 10 87 68 165
Jefferson 41 1,779 931 2,751
Total 870 9,866 5,413 16,149
Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865.