While overall closed sales in Denver Metro dropped 9.2 percent year-over-year, the luxury market soared with a 56.92 percent increase! Sales over $1 million dollars now own 3.48 percent of the market share. This represents a massive shift in the past year where buyers have jumped from the $900,000’s and ponied up the extra dough to get the home they want. This time last year, 65 homes sold over $1 million spending an average 138 days on the market and selling for 96% of list price. This year, we see 102 homes sold spending an average of only 88 days on the market and 97.29 percent list/sold price ratio.
What is interesting to note here is that, behind the numbers, leverage has shifted from the buyers to the sellers. One of the best indicators of competitiveness in the market place is the Months’ Supply of Inventory. This number is calculated by taking the number of active listings and dividing it by the average number of homes sold in the previous months. For example, if there are 56 active listing and an average of 19 sales per month, there is 2.9 months of inventory. Which is to say, if there are no new listings it will take roughly 3 months for the inventory to be absorbed.
A normal market operates at 6-7 months of inventory, anything less is a sellers’ market and anything more is a buyers’ market. The luxury market is almost always a higher number than the median. This time last year, the Denver market had 12.5 months of inventory for single family homes and 13.5 months of inventory for condos. Leverage sat in the hands of the buyers as sellers competed with each other for the sale. This year, however, months of inventory are down drastically with only 9 months for single family homes and 5 months for condos. This indicates the red-hot activity we saw in the signature market has made its way to the luxury market, particularly in condos.