Castle Pines North Home Sales Up
Byby Doug Hutchins, Castle Pines North Real Estate
Castle Pines North is a south Denver suburb where homes sales are increasing.
The number of homes sold in the 1st quarter of 2010 in Castle Pines North (CPN) increased by 39.3% compared to the 1st quarter of 2009. 39 homes sold in the 1st quarter of 2010 compared to 28 homes selling in the 1st quarter of 2009. There has been a similiar increase in home sales in Castle Pines Village just to the south.
This is a strong start to the year for sales. HOWEVER, I believe the first time home buyer tax credit and repeat buyer tax credit, which expired April 30th, drove a large portion of this increase. I believe the units sold in the 2nd and 3rd quarter will likely slow down due to many buyers accelerating their purchases in 2010 to take advantage of the tax credits being offered.
In other words, home sales for the year may well end up being “front-end loaded. So, pricing will be critical for Sellers who do not want their listings to become stale.
The average sales price in CPN increased 2.7% for the 1st quarter of 2010 compared to the 1st quarter of 2009, from $476,507 in 2009 to $489,468 in 2010. Due to the variety of home sizes in CPN and the relatively few homes that sell each year, I also like to focus on the average price per square foot, which helps adjust for the larger homes that sell. The average price per square foot has increased 5.4% from $166.15 per square foot in 2009 to $175.06 per square foot in 2010. Keep in mind that these are just averages. There are differences even within CPN regarding market activity and pricing.
Overall, pricing is driven by supply and demand. If supply goes up, prices will drop.
CPN currently has an 8.8 month supply of homes for sale compared to a 7.8 month supply of homes for sale at the end of 2009. This means that if no new homes were to be listed, it would take 8.8 months to sell the existing inventory at the sales pace of the last 12 months. That is called market absorbsion.
A balanced market is considered to be 5-8 months of inventory. Comparing the months in inventory to the year end statistic can be deceiving, though, due to the fact at year end many Sellers pull their home from the market. Therefore, the year end calculation of months in inventory can be abnormally low. A better comparison is against the months in inventory at the end of the 1st quarter in 2009 and at the end of the 3rd quarter in 2009, which were 10.0 months and 10.6 months, respectively. Metro Denver as a whole had 5.0 months of inventory at the end of the 1st quarter.
The market in CPN continues to perform differently based upon price point. Therefore, to better understand the status of the market I break down market data into three different price categories – $500,000 and under, $500,001 to $750,000 and $750,001 and higher.
For homes priced under $500,000, inventory is only at 5.8 months, which is flat compared to the 5.9 months at the end of the 3rd quarter. Again, 5-8 months of inventory is considered a balanced market. 25 homes sold in this price range in the 1st quarter of 2010, which is an increase of 25% compared to the 20 homes sold in the same period in 2009. This segment of the market is the strongest performing segment in Castle Pines North and prices are generally holding steady.
For homes priced between $500,001 and $750,000, inventory is at 10.0 months, which is up from 8.7 months at the end of the 3rd quarter. In general, prices are falling at these price points. 9 homes in this price range sold in the first quarter of 2010 compared to only 2 homes selling in the first quarter of 2009, which is a 350% increase in sales. It is encouraging to see sales activity pick up at this price point, but I believe the sales will drop back to the slower level of 4-6 sales in the 2nd quarter of 2010. Prices will continue to decrease slightly in this price range over the next 6-9 months.
For homes priced above $750,001, inventory is at 25.7 months at the end of the 1st quarter compared to 32.2 months at the end of the 3rd quarter in 2009. This reduction of inventory levels is a positive sign, but my prediction for theses homes continues to be the same as in the last few quarters. I expect homes in this range will continue to see substantial decreases in value and sales will continue to be slow. Inventory levels will need to get back to the 8 month range before prices stabilize. 5 homes in this price range sold in the first quarter of 2010 compared to 6 homes selling in the 1st quarter of 2009, which is a 17% decrease.
