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Move-up market, moving on up

Highlights:

  • Gary Bauer releases Premiere Properties report.
  • Report covers homes priced from $500K to $749,999.
  • Bauer expects this to be next “sweet spot.”

The move-up housing market from $500,000 to just under $750,000 is increasingly becoming a hot spot for Denver-area housing, according to an analysis by independent broker Gary Bauer.

This 3,292-square-foot homes in Park Hill is priced at $749,900, at the high-end of the Premiere Properties' range.

This 3,292-square-foot homes in Park Hill is priced at $749,900, at the high-end of the Premiere Properties’ range.

Bauer describes homes in that price range as “Premiere Properties.”

His analysis of the latest Metrolist data shows that there were 410 single-family homes sold in the price range in an 11-county area in May, a 34.9 percent jump from the 304 in May 2012.

“I believe this price range will be the “sweet spot” in the coming years,” Bauer said.

Overall, the market showed a 26.8 percent year-over-year increase in closings in May.

On a year-to-date basis, the Premiere Properties showed an even bigger gain.

In the first five months of the year, 1,371 single-family homes in that price range closed for $810.4 million a 47.7 percent and a 46.3 percent, increase, respectively, in the 928 sales and $553.8 million in dollar volume.

Going back two years, Premiere home sales have almost doubled, on a year-to-date basis. In the first five months of 2011, 693 homes old for $400.9 million, a 97.8 percent and 99.1 percent increase, respectively.

Last month, buyers paid $243.7 million for Premiere Properties, a 34.75 percent increase from the $180.84 million.

The average price per square foot was $230, up only 0.44 percent from $229 a year earlier. On a finished per-square-foot basis, the price dipped 3.9 percent to $174 from $181.

“One of the things I liked about this price range is that we saw an increase in activity, yet there was no big dramatic increase in prices,” Bauer said.

“That is just super.”

Bauer said he doesn’t fear a bubble in this price range, or for the overall market.

“I am not expecting a bubble at this point of time,” Bauer said.

Indeed, he is expecting more homes to come on the market, which should help to meet some of the demand for homes, which is increasingly leading to bidding wars and homes selling above the appraised value.

In May, the inventory from April increased 18.3 percent, one of the biggest month-to-month percentage gains on record.

“I can’t wait until the end of the month, because I am really hoping we have between 9,000 and 10,000 homes on the market,” up from 8,214 in May, Bauer said.

The strong showing for Premiere Properties is being driven by an improving economy that is attracting more businesses and appreciation of existing houses, he said.

A strong seller’s market is allowing people to move-up who were stuck in their homes during the Great Recession, according to Bauer and other brokers.

“I think it is a combination of new companies coming into the market because of the stronger market, who are hiring or bringing with them executives who can afford these homes,” Bauer said.

“I think the second part is just the improving move-up market,” he said.

It’s also possible that people who lived in bigger homes are downsizing into smaller, less expensive homes, he said, as luxury homes priced at $1 million or more, have been selling faster.

“Part of it might be downsizing from $1 million homes, but I haven’t done my homework on that,” Bauer said.

However, he said it is certainly possible that some people no longer need a big house in the suburbs, so are buying a Premiere Property closer to the city.

Premiere Properties are being snapped up quicker.

The average days on the market in May was 24 days, a 25 percent drop from the 32 days in May 2012.

Year-to-date, there have been 1,371 Premiere Properties sold for $810.4 million,

As far as condos in the Premiere price range, there 2343 25 sales last year for $14.8 million, compared with 21 for $12.8 million in May 2012, a 19 percent and 15.85 percent increase, respectively.

Have a story idea or real estate tip? Contact John Rebchook at  JRCHOOK@gmail.com. InsideRealEstateNews.com is sponsored by Universal Lending, Land Title Guarantee and 8z Real Estate. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.