Over the last few years, homes priced over $750,000 have seen prices fall substantially in the City of Castle Pines. Homes priced from $500,000 to $750,000 have also seen price declines, but homes priced under $500,000 had generally seen prices holding steady. Things are starting to change. Over the last two months I have started to see prices falling for homes priced under $500,000.
The average sales price in the City of Castle Pines decreased a whopping 13% in the first half of 2011 compared to the first half of 2010 from $506,729 to $442,405. 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 decreased 11% from $175 per square foot in 2010 to $156 in 2011. Keep in mind that these are just averages. There are differences even within CPN regarding market activity and pricing.
The average home price has decreased substantially, but a large portion of that decrease is due to the reduced number of higher priced homes selling in the first half of 2011. In 2011, 24% of the homes sold were priced at $500,000 or higher compared to 40% of the homes in 2010. 34 homes sold in the first half of 2010 priced above $500,000 compared to only 19 homes selling in the first half of 2011 priced above $500,000.
The number of homes sold in the first six months of 2011 in the City of Castle Pines decreased 8% compared to the first six months of 2010. 79 homes sold in the first six months of 2011 compared to 85 homes selling in the same period in 2010 and 71 homes selling in same period in 2009. The first half of 2010 was a strong sales period due to the Federal Tax Credit that was available to homeowners who went under contract by April 30, 2010 and closed by June 30, 2010. The number of homes for sale at the end of June 2011 dropped 6% from June 2010. There were 115 active listings on June 30, 2011 compared to 123 active listings on June 30, 2010 and 166 active listings on June 30, 2009.
Overall, pricing is driven by supply and demand. If supply goes up, prices will drop.
The City of Castle Pines currently has a 7.9 month supply of homes for sale compared to only a 6.7 supply of homes for sale at the end of the 1st quarter and a 7.1 month supply of homes for sale at the end of the 3rd quarter 2010. This means that if no new homes were to be listed, it would take 7.9 months to sell the existing inventory at the sales pace of the last 12 months. A balanced market is considered to be 5-7 months of inventory. If there is more than 7 months of inventory, prices would be expected to fall in the next three to six months. If there is less than 5 months of inventory, prices would be expected to rise in next three to six months. Metro Denver as a whole had 5.8 months of inventory at the end of the 2nd quarter, which is up slightly 5.5 months of inventory at the end of the 1st quarter.
The market in the City of Castle Pines 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 levels have increased to 6.3 months in inventory from 5.4 months at the end of the 1st quarter. This is an increase of 17%. Again, 5-7 months of inventory is considered a balanced market. 60 homes sold in this price range in the 1st six months of 2011, which is an increase from the 52 homes that sold in the same period in 2010. This segment of the market is the strongest performing segment in Castle Pines North and prices. However, even though the inventory levels indicate prices should be stable, I am starting to see prices move lower in these price ranges.
For homes priced between $500,001 and $750,000, inventory is at 10.5 months, which is up substantially from the 6.7 at the end of the 1st quarter. Only 14 homes sold in this price range in the first six months of 2011 compared to 22 selling in the same period in 2010. At the end of the 1st quarter I was turning bullish on this price point in the City of Castle Pines, but the second quarter performance has dampened that enthusiasm. I believe prices will continue to fall for the next 3-6 months in this category because of the higher supply of inventory.
For homes priced above $750,001, inventory levels have decreased slightly to 12.0 months at the end of the 2nd quarter compared to 12.7 months at the end of the 1st quarter. However, this reduction in inventory is due to fewer homes being available for sale instead of a large increase in the pace of home sales. At the end June 2010 there were 28 homes for sale versus only 19 homes for sale at the end of June 2011. There were 52 homes for sale at the end of June 2009. 5 homes sold in this price range in the first half of 2011 compared to 12 homes selling in the same period in 2010. Over the last several quarters I have been predicting price reductions at this price point. I see this trend continuing over the next 3-6 months and probably well into 2012.
If you would like more information on the real estate market in Castle Pines, Colorado or Douglas County, Colorado, please respond to this blog or contact me with the information provided
Leave a Reply