by Doug Hutchins, Castle Pines North Realtor
The average sales price in the 1st quarter of 2009 for a single family home in Castle Pines North was $477,700 compared to an average sales price for 2008 of $534,618, a 10.6% drop. HOWEVER, because the square footage of homes available in Castle Pines North can very widely, this average can be skewed by several large home sales (or lack of large home sales). Therefore, I also look at the average price per square foot to determine value changes.
During the 1st quarter of 2009, the average sales price per square foot was $168.74 compared to $180.01 for 2008, which is a 6.3% decrease. Even within the small city of Castle Pines North, there are neighborhoods that out perform and under perform these averages, so please contact me if you would like specific information for your neighborhood.
As I had mentioned in the Q4 blog, I am concerned with the level of inventory available in Castle Pines North. Homes are commodities and pricing is driven by supply and demand. If there is an oversupply of homes, prices will drop.
I warned in the Q4 blog that the high levels of inventory would lead to a reduction in home prices and that prediction is coming true. Unfortunately, these high levels of inventory continue. One gauge of inventory is called “days in inventory” (DII). DII in a balanced market is usually between 6 to 8 months. Currently in Castle Pines North there is 300 days, or 10 months of inventory. This means that if no new homes were listed for sale in Castle Pines North, it would take 300 days for all the existing homes to be sold based on the pace of sales from the past 12 months.
To get a true picture of the housing supply in Castle Pines North, though, I think it is important to look at this DII statistic by price point. For homes priced under $500,000, the DII is at 195 days, or 6.5 months. This indicates a more balanced market and I would expect home prices to stay relatively stable at this price point for the next three to six months. In the past 6 months, 41 homes sold in this price point compared to 42 homes selling in the same period a year prior. In the past 12 months, 112 homes have sold compared to 113 homes in the same period a year prior. Sales volumes are staying consistent.
For homes priced between $500,000 and $750,000, the DII is at 375 days, or 12.5 months. This indicates an oversupply of homes in this price range and indicates that prices will continue to fall in the near future. This price point has been affected the most when you look at sales volumes. In the past 6 months, only 8 homes have sold compared to 11 homes selling in the same period a year prior. In the past 12 months only 36 homes have sold versus 51 homes in the same period a year prior, which is a decrease of 30%.
For homes priced over $750,000 the DII is even worse. DII is at 645 days, or 21.5 months, indicating a substantial oversupply of housing inventory at this price range. Prices should continue to drop, and could drop drastically, for homes in this price point. In the past 6 months, 10 homes have sold, which is the same as in the year prior. For the past 12 months, 26 homes have sold versus 30 homes the year prior, a 13% decrease. Sales have been stable, but there has been an oversupply in inventory at the high end for several years now in Castle Pines North.
For the next six months of 2009 I see continued weakness in prices in Castle Pines North due to the large supply of homes on the market, especially in homes priced above $500,000. I do expect the number of homes sold in 2009 to closely approximate the number of homes sold in 2008. If sales do slow compared to 2008, though, this will put even further pressure on homes prices in Castle Pines North. If you would like to see a detailed report of home prices in your neighborhood, please call or email me today and I would be happy to provide you this information.