It was the fire nobody expected. In fact, January is usually the setting for what’s known as “stock

show weather,” the winter streak of temperatures that can dip to zero and beyond. But in January 2009, the weather had been mild and dry. So dry that the fire danger reached extreme levels. And then the winds came. High double-digit gusts in Boulder County blew over power lines that sparked fires further fanned by the relentless winds.   And that was a recipe for the fire that took Boulder open space by storm.

The western dividing line between open space and homes

Although the Dakota Ridge developers inserted firebreaks between the open space and the homes in case of just such an event, and backburning efforts prevented additional threats, the firefighters who worked all day and all night under intense conditions to contain the fire in 24 hours are the real heroes and heroines in what could have been a much bleaker story.

Most of the Dakota Ridge community, evacuated at about 5:00 PM the day of the fire, was re-opened to residents the morning after evacuation. Emergency personnel, faced with the tough job of denying access to commuters trying to get home after work the day of the fire, rem

The outpost for firefighters and emergency personnel during the fire.

ained personable and professional. Although residents were biting their nails all day and all night, no violence or acts of mischief were reported. Now that the action has died down, open space is back to normal, with hikers taking to the trails; the hills of Boulder are sure to look a little greener this spring.

Where the buck stopped between the north end of Dakota Ridge and the fire.

The ’90s saw one of Denver’s biggest housing booms–it was like the gold rush all over again, only in the ’90s, the gold became the tech startup scene.  Today, it looks as if the Denver homes and real estate market is about to see another surge in newcomers, this based on a story at CNN about how a large portion of the US wants to move somewhere else. Specifically, they want to move to Denver.

If you’ve read the post “Where’s the Bottom,” you may be asking yourself the question, “who cares where the bottom is?” With the prices of Denver homes at low prices, and mortgage rates taking their cue with the nose-diving, the real estate takeoff could begin soon, with influxes of families and folks from all over the US.

If you’re on the fence about buying your first home, or just your next home, it’s worth speaking with a Denver REALTOR, who takes the pulse of the Denver neighborhood markets daily, and can give you valuable, detailed, local information in just a few minutes.  You never know when the best seats on the bandwagon will be taken.  Come on in, while there’s still room for your tuba.

At the end of 2008, the American Dialect Society selected its 19^th annual word of the year. It’s “bailout.” Whatever the word may mean to you, bailout in this case refers to the government’s rescue of companies on the brink of failure, including large players in the banking industry. Whether such a choice is prophetic, pathetic, or just plain rhetoric, one thing is clear: As individuals taking each day as it comes, we still have ourselves to take care of. We have little everyday control over the government or big business; we have our shopping lists, our to dos at work, taking care of our health, our families, our homes. We have our own little budgets to worry about, and how we will make or break them again next month, the month after that. Bailouts or no.

If you haven’t seen Lane Hornung’s post on what today’s economic climate means to the Boulder real estate market, treat yourself to his entry Boulder Luxury Home Market: Fall Out From the Bailout, right here at HighRGround.

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!

Well, it’s been over a month since that fateful day on September 15. The day that Lehman went bankrupt and the Credit Crisis truly went mainstream.

Since then, the DOW has dropped more than 20% and the Great Depression is a daily topic of conversation.

Within that contextual background, my gut told me that the real estate market most severely impacted would be the high end market. In Boulder, “high end” means homes $1 million and over.

My hunch- the market for Boulder luxury homes slowed dramatically in the 30 days from Sept 15 to Oct 15.

Why? The Credit Crisis and the resulting collapse on Wall Street in the stock, bond, and credit markets had a much larger impact, both financially as well as psychologically, on potential home buyers in the luxury market. High net worth folks are typically more in tune with what’s happening on Wall Street and have a lot of their assets invested in the financial markets, so when a 156 year old firm like Lehman goes under, it means something.

These same buyers also often have the luxury of simply sitting on the sidelines until the dust settles and order is restored in the financial markets. They don’t have to buy or sell a home or move, so they hold off, thereby brining the high end market to a screeching halt.

That was my hunch. But what does the data say?

Market data for the high-end Boulder market reveals a mixed message. It’s a story of The Good, The Bad, and The Ugly. First…

The Good:

Contrary to my suspicion that the high-end market came to a standstill on Sept 15, the number of homes priced above $1 million in Boulder proper that went under contract from 9/15/08 to 10/15/08 was 10, twice as many as the 5 homes that went under contract in the same period a year ago.

Wow, the high end market is on fire! Credit Crisis……Schmedit Crisis….luxury buyers remain above the fray and my hunch of a slow down is all wrong! Well, not so fast…

The Bad:

The number of million plus homes that actually closed and sold from 9/15/08 to 10/15/08 in Boulder proper was 3. That’s right….3 closes in a 30 day period. Ouch! Last year, 12 million plus homes closed in the same period. From 12 to 3, that’s a 75% reduction in transactional volume year over year.

The Ugly:

A key statistic in determining the state of a given market is the Absorption Rate. It’s a fancy term that describes how long it will take at current sales volumes to absorb all of the homes currently on the market. The actual figure is determined by dividing the number of active listings by the number of closed sales in the last month.

This is where things get ugly in the Boulder high end market. As of 10/15/08, there were 140 active single family homes listed in Boulder proper for more than $1 million. At 3 closes in the previous month, that comes out to staggeringly high 46.7 months of inventory on the market. In other words, it will take nearly 4 years to absorb today’s inventory of high priced homes.

In short, based on my own feel for the market and the actual data since Sept 15, I believe that the market for higher priced homes in Boulder and all of the other luxury markets across the Front Range are going to slow considerably through the Fall.

I would not be surprised by a 50-75% reduction in sales in Q4 of this year compared to last year for homes above $1 million. I will keep you posted with updates as new market data comes available.