High-end luxury home market heats up
January 12, 2014
EAGLE COUNTY — The lower end of the county's real estate market — homes priced at $1 million or less — was busy in 2013. But the upper reaches of the market — homes priced at $4 million or more — has been fairly slow. That changed a bit in November.
According to the latest figures from Land Title Guarantee Co., which tracks the number of value of completed real estate transactions in the county, seven homes in the market's upper reaches sold in November. Of those sales, four were for $5 million or more. The most expensive single sale in November was a home in Vail Village that sold for $6.9 million.
Seven sales may not seem like many transactions — and it isn't. There were 23 November sales of homes priced between $1 million and $4 million, and 95 sales of homes priced at $1 million or less. On the other hand, those seven sales accounted for 29 percent of the month's total sales volume of $131.4 million. The remaining 118 sales made up the rest.
A Decent number
Those seven sales made up roughly 15 percent of the total for the year — nothing earth-shattering, but a decent number. Longtime valley broker Craig Denton, of the local branch of Berkshire Hathaway HomeServices Colorado Properties, said high-end sales in the second half of 2013 picked up significantly during the first half of the year. But in a limited market, one trend has developed: buyers of those expensive homes want something either new or significantly refreshed.
"We do have a limited amount of 'desirable' property," Denton said. "A lot of brokers have told me it's hard to find desirable property."
What makes a property "desirable?" It starts with the first three rules of real estate — location, location, location.
Just as important, Denton said, is the fact that people shopping in the market's upper reaches want something either brand-new or at least recently refreshed. Denton said a number of units in the $4 million-plus range are "dated" in one way or another, or don't have the right location. Those places tend to sit.
New Property Snapped Up
Ron Byrne, owner of Ron Byrne & Associates in Vail, agreed that new homes tend to sell more quickly. Byrne has a brand-new ski-in/ski-out home in Vail under contract right now — for about $12 million. Another new home, priced at about $20 million, may be close, he said.
"We've had a phenomenal winter so far," Byrne said, adding that he and the brokers who work for him spent a lot of time showing homes over the Christmas holidays.
"I think in January and February we'll see the fruits of those efforts (in closings)," Byrne said.
While people tend to want new or refreshed units for the $4 million or more, existing expensive units on the market may be sitting unsold for a couple of reasons, Byrne said.
A number of brokers and buyers may still be under the assumption that the local market remains in the doldrums that hit from 2009 until about 2012. Buyers may believe they can find a bargain, and submit offers reflecting that attitude.
Then there's the fact that sellers of these homes are, by definition, well set financially. Few, if any, sellers these days have to get rid of their Vail Valley vacation homes, and are willing to wait until they get an offer that suits them.
That combination has created something of a stalemate, which Denton said will probably break when buyers realize that the "bargains" of three or four years ago are no longer available.
And, while there are a handful of "spec" homes — homes built without a specific buyer in mind — Byrne said the costs of building on desirable locations has gotten quite high.
While high-end homes make up a small portion of the valley's overall inventory, Denton said it's important to have a market that's active on the high-end.
"It's a confidence-builder for the rest of the market," he said.