Wells: Seven-figure home sales on the rise in NoCo

A recent review of home sales data reflects that more than 8% of all residential transactions across the U.S. closed for at least $1 million as of last summer. While Northern Colorado sales don’t approach that same lofty territory — about 5% of regional sales reached or exceeded $1 million in 2023 — the volume of seven-figure deals has been escalating locally since the beginning of 2020.

Looking at Northern Colorado statistics, we see that $1 million+ sales jumped sharply in 2020 and 2021, before making a modest uptick in 2022 and leveling off in 2023.

In raw numbers, Northern Colorado’s $1 million+ sales (not counting Boulder, Longmont, or Estes Park) jumped from 107 in 2019 to 199 (up 85.9%) in 2020, then to 411 (up 106.5%) in 2021. The pace leveled off after 2021, but still reached 452 (up 9.9%) in 2022, before slowing slightly to 403 (down 10.8%) last year. Thus far in 2024 (as of March 25), $1 million+ sales had reached 109, with the traditionally busy buying-and-selling seasons of spring and summer yet to unfold.

What’s behind the push to higher-priced housing? A few factors are at play:

First, remember that record-low interest rates, which plunged in early 2021 to 2.65% on 30-year fixed mortgages, boosted purchasing power for all Americans. Homebuyers could afford larger loans to pay for more expensive housing.

Next, during the pandemic, more Americans desired features such as home offices and larger yards, which typically required bigger and pricier properties. With the help of the aforementioned lower interest rates, coupled with access to ample supplies of equity in their previous homes, many buyers were willing and able to upsize. Unlike previous market booms, in which a majority of homeowners were tapping equity for consumption (i.e., vacations, cars, etc.), we saw more homeowners using their equity gains for real estate move-ups.

Finally, the increase in demand described above has caused real estate values to surge across the country. Consequently, homes that were priced in the $700,000-$900,000 range before the pandemic suddenly became $1 million+ properties. For example, in 2021 the Fort Collins-Loveland metro area reported 18% appreciation and the Greeley area posted 18.9%; in both cases, these markets experienced the highest one-year appreciation gain in four decades.

Overall, a report from real estate services company Redfin shows that the share of homes worth at least $1 million across the U.S. roughly doubled between the summer of 2019 and the summer of 2023. While million-dollar listings are no longer considered eye-popping prices in Northern Colorado, our local markets are still modest by comparison with many larger metropolitan areas on the east and west coasts.

For example, Redfin reports that New York City’s share of homes worth at least $1 million was 28.6% as of June 2023; San Diego, 39.7%; Los Angeles, 38.1%; Seattle, 33%; Boston, 21.5%; Washington, D.C., 11.8%. An outlier, even for California’s high-end markets, was San Jose at 79.6%. Closer to home, Denver’s share of $1 million+ homes was 11% and Colorado Springs was 4.7%.

Other metro markets that are on par with Northern Colorado’s percentages include Boise, Idaho, 5.6%; Portland, Oregon, 6.7%; Indianapolis, 4.4%; Raleigh, North Carolina, 5.4%; and Phoenix at 7.2%. 

Brandon Wells is president of The Group Inc. Real Estate, founded in Fort Collins in 1976 with six locations in Northern Colorado. He can be reached at bwells@thegroupinc.com or 970-430-6463.

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