The year 2020 was 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.
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, Flapjack Farms sold on January 3rd at a price of $7.4 million. This sale set a benchmark as the highest priced residential sale in Boulder County in 2020.
Throughout the remainder of the year, 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 $1-2 million range increased 33.7 percent while homes in the $2-3 million range increased over 27 percent.
What’s driving the high demand? Simply put, the pandemic has not had the same negative effect on wealth as did the 2008 economic down turn, which shocked personal wealth in the form of falling stock values and bond portfolios. Indeed, jobs have been lost, especially in Colorado’s restaurants and 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” 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 “home” means. Simplified, connected, healthy, sustainable, and socially responsible living—these are characteristics sought by affluent homebuyers during this pandemic.
Continued historic low mortgage rates and a surge of relocations, spurred by the ability to work remotely, also influenced buyer decisions about moving. Among many of these movers and shakers are "young affluents"—a powerful emerging cohort of incoming 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” spurred by the pandemic.