On Oct 15, a month after the Credit Crisis exploded onto the public’s radar screen, I took a quick snapshot of the Boulder luxury real estate market (defined as homes priced at $1 million or higher), and what I found was the beginning stages of a slow down.

At that point, however, I only had a month’s worth of data, so the signals were mixed, but certainly not positive. See Boulder Luxury Home Market: Fall Out from the Bail Out

Now, we have a full 2 and a half months worth of data, Sept 15 to Nov 30, to analyze the impact of the Credit Crisis on the Boulder luxury market…and the results are by no means pretty, but perhaps not as ugly as one might suspect.

No question, the transactional volume, as measured by the number of closes in the period of 9/15 to 11/30, are down this year. 10 homes closed in Boulder proper at $1 million or more this year compared to 17 closes last year. That’s a 41% drop.

The leading indicator of the number of homes that have gone under contract tells a more promising story. 16 homes in 2008 went under contract during the period compared to 18 in 2007. Statistically flat. Not horrible.

However, the absorption rate in the million dollar market remains a concern. As of Dec 1, 148 homes were listed in Boulder proper priced at $1 million or more. Only 9 of those homes are under contract.

In the last month, only 4 homes have actually closed with a price higher than a million. An inventory of 148 homes and 4 closes per month translates to a market absorption rate of 37 months.

If you have 3 years to sell your home, no problem…but most sellers don’t!

In this market, only the most attractive properties, boasting a rare location, a huge lot, drop dead views, the wow factor of impeccable design, or a combination of all these attributes, is going to sell…and on top of all that, the home must be priced within reason. Not necessarily a deal, just within reason.

So where does the Boulder luxury market go from here? My prediction is that demand for high end Boulder homes will remain soft through the end of the year. Sellers who have to sell, such as folks who’ve already moved or spec builders experiencing a cash crunch, will cut their prices, and we’ll see some good, perhaps even great, deals between Thanksgiving through Super Bowl Sunday.

During this time, I think we’ll see Jumbo mortgage rates fall as the Credit markets continue to thaw, increasing the demand for high end homes.

As a result, look for the Boulder luxury market to pick up in the first part ‘09 and prices to stabilize in the Spring.

Of course, if unemployment in Boulder County spikes and the daily topic of conversation again becomes the Great Depression, all bets are off!