Boulder, Colorado, ranked as the top emerging luxury market in the U.S. in the second quarter, according to the high-end cut of the latest Emerging Housing Markets Index from The Wall Street Journal and Realtor.com.
“The luxury market in Boulder, it’s always existed but not nearly to the scale we’re seeing today,” said Steve Remmert, a founding agent at Compass Boulder, a city of around 100,000 people and a growing tech sector. And like many lifestyle-driven communities across the country, Boulder, a magnet for skiers and outdoorsy folks, saw a great uptick in value during the pandemic.
“Now we’re on the other side of that, our market still continues to thrive,” he said.
Each quarter, the luxury segment of the index pulls housing data for the top 10% of 60 metropolitan areas for the ranking, which takes into account information on the real estate market and other economic measures, analyzing a number of indicators to rank the most active luxury housing markets.
Indicators include growth in housing supply and demand; median listing prices; a cost-of-living measure; small businesses; local property taxes; amenities; unemployment; wages; and the share of foreign-born residents—who contribute to the economic vitality and diversity of the area.
Behind Boulder, the other emerging luxury markets span the breadth of the country.
San Jose, Sunnyvale and Santa Clara, California, ranked second; St. Louis, which took first place last quarter fell to third; Dallas, Fort Worth and Arlington, Texas, ranked fourth; and Hilton Head Island, Bluffton and Beaufort, South Carolina, took the fifth spot.
“This quarter’s list is really interesting in that I’m not sure there is a great, singular unifying theme across the top luxury markets,” said Danielle Hale, Realtor.com’s chief economist.
Instead, there are a couple of different trends—in general, beach-towns which offer a laid back atmosphere have done well this quarter, as have outdoorsy areas, she said.
“There are also a handful of larger cities that offer big job markets—half of the top- 10 are major metro areas with over a million residents, including San Jose, St. Louis, Dallas, Seattle (7th place), and San Diego (10th place). The unemployment rate in these areas is generally low, and combined with their large size, they offer a lot of opportunities for working households,” Hale said.
“In this quarter’s luxury markets, the top performers tend to be either large major metros or outdoor meccas, or, in the case of some top areas, like San Diego, the best of both worlds,” she added.
Boulder, only 25 miles north of Colorado’s capital Denver, is “a very unique town,” said Douglas Elliman’s Liza Hogan, who specializes in Aspen, Vail, Denver and Boulder’s luxury markets. “It has that small-town feel, but it’s got the sophistication you don’t find in small towns.”
“It checks all the boxes,” she said, from a strong sense of community, availability of outdoor pursuits and higher education and intellectual offerings—the University of Colorado’s flagship campus is in Boulder—to its proximity to Denver and picturesque locale.
There’s also a strong startup and business community, with companies like Apple, Google, Cisco and IBM all having offices in the town.
“Some buyers just aren’t ready to let go of a business culture, they’re not ready to give up completely,” Remmert said, and Boulder’s amenities allow them to keep “their toe in the water,” he said. “We’re a mountain Silicon Valley.”
Luxury buyers from across the country, including major cities like San Francisco, Los Angeles, New York and Chicago, are not only wooed by Boulder’s charms, but also its comparative value.
“Relative to the broader market, [Boulder is] still perceived as a bit of a value, and that’s fairly attractive,” Remmert said, especially in comparison to those pricey big-city markets many incoming buyers are moving from.
It’s also more affordable than some of its local neighbors. “The mountains have a huge allure, but it comes at a super-high price and it’s not as convenient,” Hogan added. “You could be looking at twice as much up in Aspen.”
Average luxury prices—that is listings priced at $2.5 million and up—in Boulder rose annually in April, May and June, according to data from Compass.
In June, the average sold price for a luxury home ticked up 9.4% from the same time last year to $3.9 million, the brokerage said.
A look at the very top end of the market revealed that no homes sold above $10 million in 2019 or 2021, but that four sold in 2020 and three sold in 2022, demonstrating the infancy of that ultra-luxury segment.
“A few years ago, I’d have said $12 million to $13 million [is] an outlier. That’s not the case anymore,” Hogan said. “When people ask me about Boulder, I say ‘depending on where you want to live, $1 million is probably going to get you somewhat of a fixer upper.’”
Underpinning home values in the mountain town is limited availability of stock, exasperated by geographic borders.
“The beauty of our market and the No. 1 thing that has retained value is the constraints,” Remmert said. “We’ve got mountains to the west, open space to the east and growth restrictions in place. Boulder is what it is, we can’t over develop, it’s not possible here, we just don’t have that ability.”
Like any property market, Boulder’s “is driven by supply and demand,” he said. “Our supply side is so constrained that regardless of what’s happening in the rest of the world” it’s hard to keep up with demand.
Boulder has around three months of inventory, Hogan said, half of the inventory required to have what is considered a balanced market.
“As long as there’s limited inventory it will continue to drive prices up, and Boulder has a very limited supply, and has now for decades,” she added.
Looking ahead, “I don’t see any indication that [the market is] going to slow down,” Remmert said. “I think we’re going to return to a steady place, the pandemic ticked everything up. The new bar has been established.”
Madeline Beaumont I Mansion Global I July 23, 2023