sellers’ market

Arising stock market, low interest rates and a slew of baby boomers hunting for retirement homes bolstered Boulder’s luxury loft sales, evaporating the downtown corridor’s high-end inventory. Future buyers could find luxury units an elusive prey with prices on the increase.

“There has been a tremendous amount of absorption in the past 18 months,” said John McElveen, marketing associate with Re/Max of Boulder Inc.

The luxury loft and condo market swelled with inventory several years ago when developments, such as The Arête and The Walnut hit the market at the same time and in a slow economy. Loaded with inventory, sales dropped and distressed the market, driving prices down for a short time. Since then, the economy lifted, interest rates dropped and people began to buy. A seller’s market now permeates luxury-loft real estate in Boulder, McElveen said, and other Boulder brokers and developers agree.

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“There has been a big change in the market and people are feeling a little bit richer today than they were three years ago,” said Steve Remmert, broker associate of Colorado Landmark Realtors. “We’ve evolved to the point where lack of inventory is our greatest problem.”

Sales of attached townhomes, condos and lofts increased at all price points in Boulder by nearly 18 percent last year, he said, something that transferred through to the luxury loft market. Luxury units range in price from $1 million to $5 million in Boulder County, with the strongest sales under the $3 million mark and a little lag at the top end.

“Once you get over $3 million, the audience slims quite a bit,” Remmert said.

Using The Arête — located at Canyon Boulevard and 11th Street and within walking distance of Pearl Street Mall — as a bellwether for the luxury loft market illustrates the segment’s surge. Only five units of the 22 available in the development remained unsold in March, said Stephen Tebo, owner of Tebo Development Co. and developer of The Arête. Of the five remaining units, two are under contract and expected to close within 30 days. Two units are still available for less than $3 million and one is listed at more than $4 million, Tebo said.

High-end loft buyers fit a typical demographic: the empty nester looking to retire in the near future.

“This is a favorite target of people downsizing from a single-family home once the kids are grown,” McElveen said. Many sales come from people with impending retirement plans interested in taking advantage of the downtown location before the units disappear.

The high-end loft market veers from the open floor plan seen in traditional lofts, Remmert said, with people looking for walls and bedrooms. With so many soon-to-be retirees on the prowl for a home, single-story units are the hottest commodities . Loft size can range from 1,700 to 5,000 square feet, he said.

Walkability to coffee shops, restaurants and Pearl Street appeals to many, who envision a uniquely Boulder-style retirement in the shadow of the Flatirons with the added benefit of a “lock-and-leave” unit when gone for travel to other places.

Many buyers live in Boulder. Some buy from out of state and plan to move here after retirement. In the meantime, they use the loft as a vacation location, McElveen said. The occasional out-of-country buyer pops up, too, although more as an anomaly than the norm.

McElveen called Park Gables — located off Canyon Boulevard and steps from Eben G. Fine Park — the quintessential empty-nester/second-home location with final units selling quickly. Consumer confidence and the dwindling inventory of luxury lofts drove increased sales in recent months, he said. Low interest rates contribute to consumer confidence, too, although many buyers make cash purchases for these homes.

Tebo said he saw an uptick in high-end luxury loft sales at the end of 2011, with reticence diminishing among investors interested in making multi-million-dollar purchases.

“The stock market, the whole American economy has picked up… we’re out of the recession and they don’t see us going down,” Tebo said.

Quality also contributes to strong sales, Tebo said, with design and construction at the Arête contributing to buyers’ snapping up available units.

Not only is current inventory low in the luxury loft market, but it’s not likely to expand anytime soon, Tebo said. He knows of no plans filed with the city to build more multi-unit developments. It took him more than five years from initial applications with the city of Boulder to market availability. More importantly, the downtown Boulder corridor is running out of real estate.

“I don’t believe there is even the possibility of building a number of units in the future,” he said. “It’s almost zero. There is just extremely limited space.”