For the most part, August was a dismal month for Denver-area home sales. Single-family closings were down 24 percent from August 2009, while condo sales were down 28 percent from a year ago.
But there was one segment of the market that bucked the overall trend, and it may come as a surprise – $1 million-plus homes.
There were 55 sales of single-family, detached homes last month priced at $1 million or more, almost a 31 percent increase over the 42 sales in that price range in August 2009, shows an analysis of Metrolist data released today by independent broker Gary Bauer. Sales also were up almost 15 percent from the 48 closings in July. (The data does not include the $7 million sale of the home formerly owned by Mike and Peggy Shanahan, as that deal closed in September.)
Sales pace rising
Another encouraging metric: An analysis of Bauer’s data by InsideRealEstateNews showed that almost 4.5 percent of the 1,225 active listings at $1 million or more sold in August, compared with 3.84 percent of the upper-end inventory in July and 3.14 percent of the active, unsold homes in that price range in August 2009.
“That is encouraging,” Bauer said. “Like anything else, in this particular market you have to start with the first-time home buyers an then the move-up buyers and so on, until the dominoes continue to topple. We do have buyers in the high-end area, just not as many as we used to have.”
Denver leads big bucks parade
Fifteen of the 55 home sales were in Denver, 14 were in Boulder County, 13 in Arapahoe County, nine in Jefferson County, and four in Jefferson County. In addition, there were four condo sales at $1 million or above- three in Denver and one in Boulder county. Bauer’s analysis shows the average sales price last month as $1.45 million, almost 15 percent lower than the original asking price of $1.7 million. A year earlier, the average sales price was about $1.6 million, and the original asking price was $1.8 million. “From my perspective, I see buyers and sellers marking some concessions, but not dramatic concessions,” Bauer said, although he added certainly huge discounts are being offered, especially at the highest price ranges.
Brokers who market in homes priced in the stratosphere, say they have never seen such big discounts offered by sellers of seven- and eight-figure homes.
“I think prices now are at such a level, that it is becoming very compelling to buyers,” said Sandy Weigand, a broker with with the Kentwood Co. Weigand not only sold the former Shanahan home last week for $7 million, but last month sold a home next door to it in Cherry Hills for $5.25 million, giving her the two of the largest sales in the metro area since 2008.
“I think the buyers should be jumping in right now,” Weigand said. “This is once-in-a-lifetime pricing. These prices aren’t going to last forever.”
Not only are prices at the top end being slashed, but mortgage rates are at historical lows, she notes. Many people home shopping in this price range pay cash, she said, and later put a mortgage on the property. Often, high-end buyers will treat homes much like any other asset. In today’s environment, the after-tax cost of a mortgage can be below 3 percent, and high-end buyers decide to put their money to work on investments that have the potential for much richer rewards.
Edie Marks, also a broker with the Kentwood Co., said she has never seen such deals on high-end properties in more than three decades of selling homes.
“The deals out there are unbelievable,” Marks said. “Homes are selling for 50 cents, or less, on the dollar. It is mind-boggling.”
Perhaps no home better represents the mind-boggling aspect of the market than a house she is listing at 11 Blackmer Road.
The home has 15,025 square feet on 4.7 acres, and it’s price has been slashed by more than 65 percent.
“It was priced just under $8 million, and now it is at $2.75 million,” Marks said. “And it is a castle.”
She also just put another home under contract for almost half the construction cost.
“It cost them $4.5 million to build and we put it on the market for $3.6 million,” Marks said. When there were no takers, she tried a one-day sale of $2.8 million, but still no one bit. Subsequently, she lowered the price to $2.6 million, “and I just put it under contract for $2.5 million,” she said.
GOP victory good for market?
Marks said there are still well-heeled people out there who could buy. “What is happening, is a lack of confidence,” Marks said. Marks, a staunch Republican, said many people she knows are waiting until after the November elections to decide whether to move up to the mansion-market.
“If the Republicans win, they plan to buy,” Marks said. “If the Republicans don’t win, they’re not going to do anything. I think the elections are going to be very important for a lot of people on whether they are going to make their decision to buy now, or continue the waiting game.”
Contact John Rebchook at JRCHOOK@gmail.com