Denver home-sales strength lies at upper end

Date: Jun. 6th, 2007

By John Rebchook, Rocky Mountain News
June 6, 2007

The Denver-area home sales market is flat overall, with two exceptions: sales of foreclosed homes and homes priced at more than $1 million.  There were 6,353 homes placed under contract in May, a 1.6 percent drop from the 6,459 homes sold in May 2006, according to reports Tuesday by independent broker Gary Bauer and Coldwell Banker Residential Brokerage. The reports are based on Metrolist data, which tracks homes sold by Realtors.

And while the number of homes closed rose by 15.5 percent in May, compared with April, that is typical for seasonal reasons.   Bauer expected the numbers in May to be stronger, but he suspects there are a lot of home sales in the works.

"The real hidden strength in the market is the upper end," said Chris Mygatt, president of Coldwell Banker Residential in Colorado.

Sales of the pricey homes are up 18.4 percent in May, with 90 homes priced at $1 million or more closing, compared with 76 in May 2006.

May was the third-best month for expensive home sales since Coldwell Banker began tracking that segment in 2003.

"Usually, it is the movers and shakers who are buying these homes, and it shows they have confidence in the market and are very optimistic about investing in real estate," Mygatt said.

Also, that typically means they sold a home priced at $400,000 or more, or moved here from outside Denver, both of which are good for the market, said Jim Nussbaum, a broker with the Kentwood Co.

Nussbaum said he has several clients looking for homes priced between $1 million and $2 million, and recently was contacted by another broker who said he has someone who might be interested in a $13.9 million condo he is listing across from Denver Country Club - the most expensive condo ever to hit the market in the Denver area.

Meanwhile, the average price of a single-family home closed in May dropped to $318,904 from $322,510 in April. The median, or middle, price of a single home rose to $251,155 from $248,000 in April.

Both the median and average prices were up slightly from May 2006.

It's unusual for the average price to be down when the high- end market is strong, because the expensive home sales typically skew the numbers upward.

Blame the increasing number of sales of foreclosures being dumped on the market, Mygatt said.

"Banks are getting rid of their foreclosures; they have become sellers, not listers," he said.

Mygatt also cautioned that a surplus of high-end infill developments, from Hilltop to Sloan's Lake, is cutting developers' profit margins.

And while the overall market is flat, there still are pockets of strength, said Sam Barnes, a broker with Home Real Estate in Westminster.

"I'm doing a good amount of business in the City Park area, Arvada, and the northwest neighborhoods of Berkeley and West Highland," Barnes said. "They have sustained their value. Washington Park and LoDo also are still getting some appreciation."

Barnes said the meltdown of the subprime mortgage market eventually will help the foreclosure crisis. Subprime loans are higher-interest loans for buyers with bad credit.

"The best news is that when all of these subprime lenders took hits, it washed a lot of people out of the market who were buying homes that shouldn't have been," Barnes said. or 303-954-5207