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Million Dollar Denver Area Housing Market Showing Signs of Recovery

While the million dollar housing market is still far from enjoying a full recovery from the recession. InsideRealEstateNews reports that things seem to be moving in the right direction within this part of the Denver area housing market.

Although luxury homes are still the slowest moving homes on the Denver area housing market, the majority of those who sold their million dollar homes in May did manage to make a profit on the transaction.  Unfortunately, for sellers in Arapahoe Country, this trend did not hold true with their homes, where the luxury home market still appears to be struggling.

Overall, 44 luxury single-family detached homes were sold within the Denver area at a total cost of $63.4 million. With the homes being listed for a total of $68.7 million, this means the homes sold for an average of 92.3% of their asking prices. After conducting an analysis to determine the Actual Value of the homes, InsideRealEstateNews found that the average sale price per square foot for these homes was $334.58, with the lowest priced home being sold in Arapahoe County at a rate of $225.32 per square foot. The most expensive home, on the other hand, was sold in Boulder at a cost of $766.17 per square foot. If this home were to be removed from the overall figures, the average price per square foot in the Denver area would fall to $324.

According to the experts, whether or not these homeowners genuinely earned a profit when selling their homes is largely dependent upon timing. While those who purchased the home during the peak years of 2005 to 2006 probably suffered a loss, those who purchased their homes prior to that time likely made money from the transaction. Similarly, those homes located in neighborhoods around Denver as well as in Boulder were more likely to retain their values than those located in suburban enclaves. Still, experts are certain that most of those who stood to lose money in the transaction probably didn’t have their homes on the market in the first place.

“I think most $1 million-home owners still do have some equity in their homes, unless they are builders who built on spec,” said Chris Mygatt, who is the president of Coldwell Banker Colorado. “Let’s say I owned a home that has lost $200,000 in value. I am smart enough to know this is cyclical, and if I can wait, three, or four or six years, my home will likely come back to where it was, or beyond. Now, if we were in Las Vegas or Miami, or some other market where they built so many upper-end houses that there is no chance they will return to their old prices anytime soon, people are just giving them back to banks in droves. That is where you find the so-called deals.”

Mygatt goes on to contend that most who are buying million dollar homes in the Denver area probably are not getting great deals.

“Let’s say you buy a home in Cherry Creek North or Hilltop for $1.2 million, that previously sold for $1.9 million, you shouldn’t pat yourself on the back for making the deal of the century,” said Mygatt. “The home is probably worth…$1.2 million. Was it ever really worth $1.9 million? Probably not. And when you go to sell it, the price you get is going to calibrate around the $1.2 million, not the $1.9 million.”

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