Colorado Luxury Home Market: Impressive Growth and Increasing Demand
Will the Colorado luxury home market continue to rise? We say yes! The demand has never been higher and inventory has never been so low. 2021 is a great year for seller in all price points including the luxury sellers. As a luxury real estate agent, I have seen an increase in purchasing power as well as a willingness for luxury buyers to go over list price.
The Colorado Luxury Home Market
The momentum is continuing to build in the Colorado luxury home market. “Continued growth in Colorado’s luxury market is likely to continue through 2021, fueled by strong net migration trends, an improving economy and more young people in the state. Income growth is also supporting the increased demand, as income growth outpaces home price growth,” said Richard Wark, managing partner of Elite Real Estate Professionals in Lakewood. Elite brokerage company is currently active in 16 communities. The Luxury Market Overview Colorado has the sixth-most luxurious housing market in the United States. From 2000 through 2016, the average number of days on the market of luxury homes in Colorado decreased by 74%. Colorado is home to two of the most expensive towns on the entire U.S.
Luxury Home Inventory 2021
Listing Numbers: Luxury homes: 2,520 (2018) 3,000 (2017) 2,600 (2016) Luxury Homes on the Market: Luxury Homes in Colorado: 9,280 (2018) 10,320 (2017) 9,000 (2016) Luxury Homes that Sold in Colorado: 4,380 (2018) 4,200 (2017) 4,200 (2016) This past year, however, we did see a decrease in average days on the market which has left many sellers, especially those in the luxury market, scrambling to find their dream home. The inventory numbers for 2018 are deceiving and show a decrease from prior years, despite the market at all-time highs. Luxury homes are staying on the market much longer than they used to. When purchasing a luxury home, the buyer should expect the transaction process to take at least 60 days (hopefully 90) so that the seller has time to transition.
Luxury Home Prices 2021
Two types of buyers will be looking for luxury homes: those who do not want to own a home right away and for those who are looking to do a buy-and-hold investment. As a luxury agent, it is very important to educate our clients about this important change that will take place in 2021. Here is how the luxury market will change in the next 10 years: Luxury Homes: Prices to Rise from 2016: 2017 to 2021, Luxury Homes 2016: $1,320,000 to $2,200,000. Luxury Homes: Prices to Rise from 2017 to 2021, Luxury Homes 2017: $2,100,000 to $2,450,000. Luxury Homes: Prices to Rise from 2018 to 2021, Luxury Homes 2018: $2,600,000 to $2,800,000. Luxury Homes: Prices to Rise from 2019 to 2021, Luxury Homes 2019: $3,000,000 to $3,400,000.
Luxury Home Trends
Sellers will be looking for value by offering a larger discount to complete sale. If the home has already been priced competitively and as per market value, then it is a seller’s market. If not, then it is a buyer’s market. Buyers need to have their eyes on the prize and set their price expectations accordingly. Sellers will be focusing on creating a unique listing presentation to target the most targeted buyer group. Luxury Homes Luxury real estate represents homes of significant value, design, quality, and craftsmanship. With this in mind, and recent trends, there will be more construction of homes with architectural significance in the next few years. We’ve seen the past few years with new construction homes selling in multiple days at the bidding deadline.
Consumer Trends and Purchasing Power
The majority of luxury home sales are completed through closed transactions and that means those of us who are selling can effectively plan our closing strategy. Consumers are increasingly gaining a sense of financial security through their higher paychecks. Higher paychecks mean consumers have more disposable income. This translates into more purchasing power. The recent GDP numbers speak for themselves, jobs are booming! Now, let’s add the rising tax brackets into the mix and you have a much more confident consumer base! All these factors suggest that, yes, the market will continue to grow! Overall Home Price & Ranking The median home price in the state of Colorado is $372,000. Luxury home pricing falls under this pricing category but can still command higher prices.
Impact on the Luxury Market
The affluent buyer and seller are becoming more proficient and in order to accomplish this, they are asking for new or enhanced properties and upgrades. The low inventory means sellers can be more aggressive in price and buyers have increased leverage. Because of this, the potential for home improvements at a greater price point increases and the ability to achieve price points previously considered attainable is now attainable. The Colorado market is one of the most under-valued, especially in the luxury market. Increased demand and increased attention for many segments of the market will allow for moderate to high end home improvement projects.
A new high for luxury home sales
In 2017, Colorado saw an increase in the number of luxury sales over 2016. According to the most recent Luxury Home Sales Report from Central Colorado Association of Realtors, total luxury home sales increased 4.42 percent in 2017 to a total of 34 transactions. 2016 was also a record year for luxury home sales, with 35 sales reported. Meanwhile, the mid-luxury home segment experienced a decrease of 12.91 percent to 715 transactions and the low-end homes fell 10.19 percent to 1,854 sales. If we dive a little deeper into Colorado’s luxury home market, we see that the mix of luxury sales continues to favor buyers in the upper and mid-luxury price points.
The demand from the luxury market is strong
These buyers are continuing to raise their asking prices and demand higher price points as they have been traditionally accustomed. These buyers typically purchase for lifestyle reasons and are willing to purchase at over list price. Buyers are willing to pay up for their dream home in these beautiful neighborhoods that the Denver luxury market has to offer. Luxury homes in the Colorado Luxury Market With the luxury market increasing by more than 10%, this provides a great opportunity for sellers of luxury homes to move fast and receive the highest price possible. Homeowners are taking the opportunity to sell their luxury homes in record time. Buyers are jumping on these types of luxury homes when they come on the market.
Inventory continues to fall
After just a few years of a hot market, inventory has dropped considerably. It looks like the bottom may have been reached in January 2017 and inventory has remained fairly low ever since. There is less than a 6 month supply of inventory in many parts of the state with some being 1 to 2 months. But this is still the peak season, and as with any other year, the summer months will be very busy for luxury real estate agents and they will see a steady increase in sales. Which buyers are using Colorado for real estate? There is a huge shift in buyers. The Millennials are starting to buy their first homes. There is less focus on buying a $1M home in LA and more on buying a $500K home in Colorado. Often they are younger buyers with limited experience in the area. Their No.
Looking at the future of the Colorado luxury home market
You do not have to be a luxury buyer in Colorado to see the growth that is coming. From the inside looking out, sales for both homes under $500,000 and homes between $500,000 and $1,000,000 were up in Colorado last year. If you are looking for something below that price, look for more inventory to come. After all, our state is the second largest and fastest growing state in the country! Continued under… Luxury real estate market is increasing in Colorado Luxury home price increases in Colorado are not out of reach for those who are looking for the property that is right for them. A small lifestyle change such as moving to a new property, larger area, or even a new neighborhood can easily drop the price a couple hundred thousand dollars.