Is it a Seller’s Market for Luxury Homes?
Has the pendulum officially swung in favor of a buyer’s market for luxury homes priced $1 million and up?
In January, there was 7.65 months of housing inventory for the luxury segment; so, technically speaking, the answer is yes. The industry’s standard definition of a seller’s market is six months or less of inventory currently available, and a buyer’s market is seven months or more.
However, coining the luxury market as a buyer’s market comes with a caveat as it is not so ‘black and white.’ The luxury market in sales velocity is very dependent on the type of property, neighborhood, year the home was built, how updated it is, and so forth.
In this high-end price segment, the Denver area has only just gone over seven months. And when you look at other factors, like days on market, conditions to sell are still great. From 2016 to 2018, the median days on market has ranged from 71 to 84 in the luxury segment. Last month, median days on market was at 41!
So, home sellers must be cautioned not to despair that they are no longer in a “seller’s market,” they just need to manage expectations and price their home right. Home sellers are still in a robust market, in a city with good in-migration, and a great lifestyle.
More Housing Choices is Good for Homebuyers and Sellers
In January, the number of new residential listings for all prices ranges increased 109.7 percent from December to 4,821, an increase of 13.6 percent year over year. Active listings were up just 5.45 percent from the month prior, and up 52 percent compared to 2018’s record-low January reaching 5,881. For comparison, the number of active listings is still significantly below the historic average in the month of January of 13,469 (1985-2018).
So, even though the Denver area is still a seller’s market in most price ranges, there’s no doubt this is the best time to buy in a long time. With more choices and interest rates lower than expected, homebuyers placed more contracts in January compared to December, so more sales are expected.
While buyers are taking advantage of their housing choices, home sellers are still seeing appreciation with the average sold price up from $448,132 in January 2018 to $461,101 in January 2019.
All in all, now is a good time for buyers and sellers.