Dreaming of buying a $1 million mansion in the Pikes Peak region?
Maybe a custom home with exotic hardwood floors, stainless steel appliances, a gourmet kitchen, theater room, wine cellar, more bathrooms than bedrooms and majestic views?
Whether you have the cash on hand or would need to get lucky in the lottery, get in line. The demand for luxury properties in Colorado Springs and surrounding areas has gone through the roof — a decorative, slate-tiled roof, of course.
“The demand is high right now, even at that price point,” said George Nehme, a real estate agent with the Springs office of upscale brokerage LIV Sotheby’s International Realty and Pikes Peak Association of Realtors board chairman. “And the good ones sell very fast.”
Springs-area home prices — similar to markets nationwide — have skyrocketed in recent years. In general, a shortage of homes and a buying spree driven by historically low mortgage rates have led to multiple offers, bidding wars and escalating prices, real estate agents and builders have said.
The median price of local single-family homes that sold in August remained at a record high of $450,000 for a third consecutive month, according to a recent Realtors Association report that tracks sales in El Paso, Teller and other Front Range counties.
August’s price climbed 18.4% over the same month a year ago; it was the 14th straight month of double-digit gains on a year-over-year basis.
As prices have soared, fewer homes that once were considered to be affordable — those going for $400,000 or less — are available. And, not surprisingly, as the supply of cheaper homes shrinks and prices rise, sales of more expensive homes are on the rise.
But it’s not just that prices have gone up that’s resulted in increased sales of luxury homes; the properties, say real estate agents and builders, are simply more in demand.
Realtors Association statistics show:
• Five years ago, 1,240, or 85.4%, of 1,452 single-family homes and patio homes sold in August 2016 were priced at $399,999 or less. Last month, 574, or 30.7%, of 1,870 homes sold were in the same price range.
• In August 2016, 83 homes sold in the $500,000 to $799,999 price range or 5.7% of that month’s total sales. In August 2021, 574 homes or 30.7% sold between $500,000 and $799,999.
• There were six home sales between $800,000 and $999,999 in August 2016; last month’s total was 66.
• When it comes to $1 million-and-up homes, only seven were sold in August 2016; last month, 43 sales topped the $1 million mark.
• Last month’s seven-figure sales is part of a year-long trend. Through the first eight months of 2021, there have been 321 sales of $1 million-and-up homes. For all of 2016, there were just 45.
Why such a strong demand for higher-end homes in the Colorado Springs area, and who can afford them?
Some buyers have come from larger, more expensive metro areas and have sold their equity-laden, million-dollar properties in other markets, Nehme said. They now have large amounts of cash to invest in a posh home when they arrive in the Colorado Springs area, he said.
“Some of them have made up to a half million dollars in equity in such a short period of time on million-dollar-plus homes,” he said. “So, they’re bringing that money here because of what we offer — lifestyle, amenities.”
Other wealthy out-of-towers might want second homes and can afford a luxury property, even if it’s just for seasonal use, Nehme said.
“People love coming here during the summers,” he said. “If they’re coming from California, some parts of California are very hot. Some parts of Florida are humid and hot. Texas. … Summers here are just better.”
Some buyers are wealthy retirees who have made money from the sale of homes in other markets or through long-term investments, said Steve Hood, the owner of Alliance Builders, a Springs-area custom builder.
Hood said he’s had out-of-state clients from Minnesota, Missouri and New York City, but also homeowners in Springs neighborhoods, such as the northeast side Cordera, who are looking to move up.
Though he declined to say how many homes Alliance Builders is constructing, Hood said today’s demand for luxury homes is “significantly better” for his company than it was four to five years ago.
“The stock market is strong and people are making money with their investments, in general,” he said.
His home costs are being driven by a variety of factors, Hood said.
Home sites can run about $300,000; his homes then typically start at about $1.2 million, which is on top of the land, Hood said. Rising building material, transportation and labor costs also contribute to high home prices, he said.
In fact, prices for all new luxury homes are heading up, Hood said. Semi-custom homes — whose floor plans and design elements might be found in multiple properties — that a few years ago might have cost $700,000 now might cost $1 million.
An Alliance Builders custom home that’s featured in this year’s Parade of Homes, sponsored by the Housing & Building Association of Colorado Springs, has six bedrooms, eight bathrooms and 7,710 square feet. The home was sold before the start of the parade, Hood said; its sale price was $2.9 million.
Many luxury buyers also have moved to the Springs or northern El Paso County from the Denver area, a trend real estate agents have seen for several years, said Jill McFeron of Keller Williams Partners in Colorado Springs.
McFeron said her average sale price is $900,000 for homes she markets in unincorporated areas of Black Forest, north of town. But even as prices rise, they remain cheaper than those in Denver, and homebuyers can purchase more home for their money here while they commute to jobs up north, she said.
Some Denver-area residents who buy in the Pikes Peak region actually are California transplants, McFeron added. Their employers have relocated or expanded to the Mile High City and brought all or part of the workforce with them, she said.
Once in Denver, some ex-Californians who’ve sold their homes there have plenty of money to spend, she said. Turned off by Denver’s traffic congestion and other concerns, they look elsewhere for a place to live, since they might work remotely or don’t have to commute as much, McFeron said.
“They’re learning now they don’t have to commute or they can commute less into their offices,” she said. “They’re getting out of that Denver quagmire, they’re coming down here to normal schools, not year-round schools, to no crime, to a beautiful city.”
When buyers purchase a luxury home, what should they expect to get? Plenty.
In his new homes, Hood said, buyers can expect large modern kitchens with high-end finishes, luxury master suites, large and open great rooms, state-of-the-art appliances and four-car garages, among other amenities.
The Alliance Builders property in this year’s Parade of Homes includes a gourmet kitchen, oversized dining area, a study hidden behind a bookcase door, a European-style pub, wine room, entertainment space and theater room.
“We go as far as folks want to go,” Hood said of his homes.
But how much longer will there be a demand for upscale properties?
McFeron expects high-end sales to continue. It’s possible some homes might take a little longer to sell, she said. Otherwise, she doesn’t see any red flags that signal a slowdown.
“We may get, right now, a little longer on market, which is pretty typical for the summer market,” she said. “But the sales, there’s no flattening out yet. There’s no flattening or dropping of these sales. We’re not seeing it.”