Last week, I wrote about rising sales volume for Boulder Real Estate and the importance of strategy suited for current market conditions. See Sales Volume Spikes in Boulder.
Market conditions will always vary by price range, location and property type. Certain layouts are more desirable than others - open floor plans and bedrooms on the upper level, for example. The same is true with houses that have been recently updated with high quality finishes and modern paint colors. Sales volume for houses rose 12% last year in the City of Boulder, but not all price ranges fared equally. Here's how the market performed by price range:
The chart above shows the relative change in sales volume by price range for single family, detached houses in the City of Boulder. Sales volume at the entry level fell strongly while the mid range rose moderately. The $900,000 to $1MM price tranche had a strong increase, up 86%, but the $1MM to $2MM rose only slightly. The most dramatic increase occurred for $2MM and up houses, up over 300%.
Depth of market is an important concept to understand. Take a look at the following chart:
The chart above shows the breakdown of sales volume by price range, expressed as a percentage of total sales. In other words, you're looking at depth of market.
The +2MM category had a sales spike of over 300%, but this price tranche comprised only 3% of the market. It's a thinly traded side of Boulder real estate. Meanwhile the $400 to $499 price tranche was 7x deeper, with 21% of the market last year. This much larger tranche was up only 6% in sales volume.
Got Questions?
Here's a hint - It has more to do with inventory availability than buyer demand. The absorption rate at the entry level is extremely high. There is very little inventory. Although attractive homes at all price ranges will spur bidding wars, the entry level is particularly ruthless.
Why did sales above $2MM rocket upwards? Take a look at the S&P 500 for a piece of the answer. I don't have a handy statistical analysis to prove it, high end home sales and the performance of broad market indices appear to move in sync. Buyers take gains from their stock portfolios and invest in more stable asset classes. A luxury home is also far more tangible reward than numbers moving upward on a screen. You can't live in investment account statement or show it off to your friends, can you?
What's your strategy?
Breaking down the market by price range is not enough to custom tailor a strategy. Buyers and sellers need a deep understanding of the market of their specific home (or targeted home).
My general advice to sellers is to price slightly ahead of the upwardly moving trend, depending on your risk tolerance and degree of motivation.
My general advice to Buyers is to negotiate with deep knowledge of market conditions and with confidence for how the contract protects you. This will enable you to step in with a strong offer.
The key in both cases is to have a smart, experienced, and savvy Realtor to advise you and negotiate on your behalf. If you're shopping agents, don't hesitate to give me a call. I'd love to talk to you about Boulder real estate. You can reach me at 303.746.6896.
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