The year 2020 is one for the record books, something everyone can probably agree on. It was certainly a record breaking year in most real estate markets across the country, and the Boulder/Denver metro area was no exception. No one could have predicted that, under the veil of a global pandemic, we would see growth of 30 percent or more in some of our market segments, and particularly in the category of luxury properties.
Boulder’s most significant sale
The most significant luxury home sale of the year in January 2020 set the tone for Boulder’s luxury home market, listed and sold by WK Real Estate. The premier residence in East Boulder County known as Flapjack Farms sold on January 3 at a price of $7.4 million. Despite a record-breaking year for the area’s luxury market, this sale set a benchmark as the highest priced residential sale in Boulder County in 2020.
WK associates Liz Benson and John Hoeffler co-listed this stunning contemporary mid-century modern home, set on 15 acres of idyllic woods and ranch land. The property received significant exposure throughout its marketing period through WK Real Estate’s partnership with Luxury Portfolio International® (LPI), the luxury marketing division of Leading Real Estate Companies of the World®. Flapjack farm received global exposure amongst 50,000 of the world’s most remarkable homes on LPI’s website. It was nominated in the Modern Masterpieces category in HGTV’s Ultimate House Hunt and featured in Luxury Portfolio Magazine as well as on numerous other websites and blogs.
High end market details
The sale of Flapjack Farm was just the start of a historic year in luxury homes sales in Boulder and Broomfield Counties. The number of units sold and overall sales volume for homes over
$1 million both increased 31 percent year over year from 2019. Total sales volume of properties in the $1 million to $2 million range increased 33.7 percent and increased over 27 percent for those in the $2 million to $3 million range.
There were more homes sold over $3 million in the history of this area, an increase of almost 14 percent more homes, accounting for a 25.5 percent increase in sales volume in this category. This significant increase in volume is due in part to 120 percent more homes sold over $5 million in 2020 compared to 2019.
As of February 26 and based on the rate of sale for luxury properties in 2020, there was 1.8 months of active inventory of homes for sale over $1 million in Boulder and Broomfield Counties, about one month and a half less than the end of February last year and a month below the 2.8 months available at the end of last month, January 2021. Homes priced in the $1 million to $2 million range had the lowest available inventory at 1.1 months, while there is 3.6 months of inventory in homes priced from
$2 million to $3 million.
Homes in that $1 million to $2 million “entry level” luxury that might have had a hard time moving several years ago flew off the shelf last year and continue to do so in the first part of 2021.
Sellers with homes priced over $3 million will wait longer for a buyer with 8.5 months of inventory, however that is down from 14 months this same time last year, and from 10.5 months just last month, January 2021.
Overall WK Real Estate expects to see continued high demand in all price points through at least mid-2021 but perhaps at a slightly less frenetic pace towards the latter part of the year. With continued low interest rates it’s a great time to trade up in the Boulder/Denver area.
What’s driving the high demand?
The pandemic has not had the same negative effect on wealth as did the 2008 economic downtown, which shocked personal wealth in the form of falling values of stock and bond portfolios. The economic effect of COVID-19 is totally different in that it has been a shock to income. It has also not affected the affluent in the same way it has affected other demographic sectors.
Indeed, jobs have been lost, especially in Colorado’s travel and tourism industries, but other components of wealth have recovered relatively well. Savings rates have risen, especially for the affluent, while consumer spending is down compared to pre-pandemic levels. Our inability to travel and have “experiences” reduced spending which has more people turning their attention and discretionary funds to the home.
2020 was the year we all realized the importance of “home”, with reinvigorated appreciation for what homes do for the people in them. Simplified, connected, healthy, sustainable and socially responsible living – these are characteristics sought by affluent homebuyers in this era of the pandemic.
Continued historic low mortgage rates and a surge of relocations, spurred by the ability to work remote, also influenced buyer decisions about moving. Among many of these movers and shakers are “young affluents” — a powerful emerging cohort of luxury homebuyers.
Experts predict that more than $15 trillion will be passed down from the world’s wealthiest individuals to the millennial and Gen Z generations by 2030 in a “great transfer of wealth”.
Colorado and the West are booming
Despite early predictions that the market would stall, the local data shared here indicates the luxury home market saw the biggest boom in years, locally in Colorado and beyond. Amid closures and travel restrictions, affluent buyers looked for comfortable places to quarantine, and rental markets in enclaves such as Vail, Malibu in California and The Hamptons in New York exploded.
WK Real Estate has the only full-time staffed relocation and referral department in the Boulder and North Metro Denver area. With WK’s membership in Leading Real Estate Companies of the World (LeadingRE), their associates have the ability to assist clients with real estate connections in virtually any part of the world. In 2020 the firm successfully made introductions that enabled their clients to purchase and sell significant primary and second homes in many areas including Aspen, Beaver Creek, Breckenridge, San Francisco Bay Area, Scottsdale and Santa Fe.
Clients introduced to WK Real Estate from their LeadingRE affiliate partners across the country flocked to Colorado and the Boulder area for many reasons, some related to the global health crisis. WK observes that newcomers appear to be driven by a real need to change the way they live, work and play. They look for proximity to recreation, lower population and housing density, more moderate seasonal climates, and in some cases want to escape a higher cost of living area, such as California or New York.
Relatively speaking the Boulder/ Denver area is a mecca for healthy living and a place to escape the hustle-and-bustle of urban life. WK predicts that we will continue to see an influx of newcomers to Colorado in 2021 as another wave of homeowners accelerates their search for a lifestyle haven and pushes Americans to rethink their home buying priorities.
WK’s focus on the client experience
Today’s buyers and sellers want and need a simplified “smart” experience. From virtual showings, 3D interactive floor plans and personally curated online property searches to 100 percent secure digital contracts and contact-free appointments and closings, WK Real Estate continues to evolve and enhance the client experience. The pandemic has prompted virtually every industry to adapt common practices. WK Real Estate embraced these industry changes and continues to ensure that every associate and each of their clients have not only a productive experience, but a memorable one.
WK Real Estate has assisted clients in the luxury home market since the company’s founding in 1976. In the early 2000s the company was one of the founding participants in LeadingRE’s Luxury Portfolio International® luxury home marketing program and continues to be highly involved in that program today.