This month I want to chat about an issue that has been bugging me for some time. What is a high-end property? You’ll frequently see statistics, articles and analysis of the over One Million Dollar market, but with the average sales price of a single family home in the City of Boulder at $1.09M in 2017, does talking about the One Million Dollar market as something special or different make sense? After all in the City of Boulder today, a million dollar home sale just means that sale is average, not something special. I already had all of the data for Boulder County sales going back to 2002 that were reported to IRES, so after some spreadsheet formulas I was able to start zeroing in on what a high-end property means today.
Back in 2002, a million dollar home sale meant that home was one of the top 1.29% of the sales across all of Boulder County. As of the end of 2017, a million dollar home sale means that home was one of the top 10.26% of the sales in the County, not nearly the same cachet. To be in the top 1.29% of the sales in 2017, a home would have had to sell for $2.1M. I didn’t take the time to break this data down into smaller market segments like individual cities, but looking at the overall County data, it felt to me like the top 3% of homes sales deserved the label of the high-end.
Some interesting things appear when I charted this data. The high-end reacts to market forces differently than the median and average price points, which makes sense. For most people, a home is a necessity, something that is purchased and held onto through good and bad market cycles. For high-end homes, we see the market downturns have a bigger effect as these homes usually aren’t a necessity but a luxury.
Another interesting item in the data, the high end homes were up by 114% since 2002 while the average home was up 81% and the median home was up 89%. Some of this discrepancy may be due to Affordable Housing program homes that remain in the data, but this better appreciation rate for the high end of the market was a surprise. Another possible explanation is that the high-end of the market is a smaller market segment, in 2017, the top 3% of all sales was only 147 sales. One or two exceptionally high high-end sales could be skewing those numbers and in 2017, there was one sale for $13.1M, a 23 unit income property in downtown Boulder.
As with any statistics debate, these numbers are County averages and may differ for your area. Obviously a high-end sale in the City of Boulder means something very different than a high-end sale in Longmont. I may dig back into the data and try to pull out what the top 3% of sales are for the different cities for a future article. Hope everyone has a wonderful spring!