The Denver luxury real estate market is alive and well, but not in all the ways many would assume.
In 2018, Denver metro luxury homes sales (defined as homes that sell for over $1 million) ticked up 17 percent over the last 12 months through June to 1,661. But don’t confuse sales with appreciation.
The number of luxury real estate transactions is up 17 percent year-over-year through June 2018. However, the average sold price is only up 2 percent in that time period.
This can be confusing, as we hear reports, like the one from DMAR Real Estate Market Trends Report in June that note, “The year-to-date average sold price hit $523,255 for the single-family home market, up 10.96 percent from last year, with the median sold price at $442,450, up 9.25 percent.”
This gives the perception all markets are up 9 to 10 percent, which simply isn’t true.
Denver luxury neighborhoods
As you would expect these sales are sprinkled throughout Denver metro’s growing roster of luxury neighborhoods, defined as those ‘hoods with at least 10 percent of homes worth over $1 million.
Since 2014, the number of Denver luxury neighborhoods has doubled.
Read the previous sentence again. I’m sure no one familiar with Denver real estate market would be surprised, but that fact reflects the rapid appreciation Denver homes experienced in the wake of the Great Recession.
Prior to 2014 we identified luxury neighborhoods as Belcaro, Cherry Creek, Cherry Hills Village, Country Club, Greenwood Village, Hilltop, Polo Club.
By 2018, seven new neighborhoods joined the mix including Bonnie Brae, Cap Hill, Cory-Merrill, East Washington Park, Lodo and Observatory Park.
Denver Luxury Neighborhoods
Source: Kristin Harris Homes using MLS data.
However, it would be wrong to assume that appreciate for luxury homes is still rampant. It occurs, but by no means uniformly.
Uneven luxury appreciation
With more luxury home sales spread out, some luxury neighborhoods are not seeing strong home value appreciation. For example, the year-over-year average home price in Cherry Creek North increased just 2.05 percent, from $1.08 million to $1.12 million, through June 30.
I was surprised to calculate the average home price in East Wash Park, an area with new build after new build pops happening seemingly on a daily basis. It has historically experienced some of the strongest home value appreciation in the city. However, the average home sales price of luxury homes increased just 2.19 percent year over year, from $1.13 million to $1.16 million, in the 12 months through June 30.
Hilltop saw a modest 5.1 percent increase in the average sale price over the same periods year-over-year, from $1.28 million to $1.35 million. It’s modest appreciation, but not the 10-plus percent some might assume if just reading media headlines.