Strong Sales of Entry Level Homes in Castle Pines
by Doug Hutchins, Douglas County Realtor
Castle Pines North is a Denver suburb located in norther Douglas County. It’s where I work and it’s where I raise my family in a great, Colorado environment. 2009 has seen the real estate market in Castle Pines North, Colorado break into two distinct segments, the high end and low end.
The high end market encompasses homes that are priced above $500,000 and the low end encompasses homes priced below $500,000. The low end market has continued to hold steady, with units sold and prices staying stable. The high end, however, has suffered, with both units sold and home prices declining. This trend is consistent with the rest of metro Denver, where sales of homes requiring a non-conforming loan (loans above $417,000) have struggled.
The average sales price in Castle Pines North (CPN) has dropped from $534,618 in 2008 to $476,507 in 2009, which is a 10.9% decrease. However, this is up 3.5% from the $460,117 average sales price for homes sold in the first three quarters of 2009. The increase in average home prices in the 4th quarter was driven by an increase in the percentage of homes selling above $500,000. In the 4th quarter, 40% of the homes sold in CPN had a sales price greater than $500,000, compared to only 26% of the homes sold in the first three quarters having a sales price greater than $500,000. This is the one encouraging sign for the high end market, but I am not optimistic that this trend will continue 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 dropped 7.7% from $180.01 per square foot in 2008 to $166.15 per square foot in 2009. 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. In 2009, 164 homes sold in CPN, a reduction of 6.8% from the 176 homes that sold in 2008. There were only 105 homes for sale at the end of 2009, compared to 136 homes for sale at the end of 2008. This is a reduction of 22.7%. Since the available inventory dropped more than the sales in the past year, supply has tightened, which is a positive sign!
Did You Know: Castle Pines, Colorado has it’s own Chamber of Commerce,
City Council and Shopping Center?
CPN currently has a 7.8 month supply of homes for sale at the end of 2009, compared to 9.4 months at the end of 2008. This means that if no new homes were to be listed, it would take 7.8 months to sell the existing inventory. A balanced market is considered to be 6-8 months of inventory. However, the months in inventory at the end of each year can be deceptively low. This is due to the fact many sellers pull their homes from the market during December and January for the Holidays. Therefore, I always caution placing too much emphasis on this number at year end. At the end of the 3rd quarter in 2009, inventory was 10.6 months. Metro Denver as a whole only had 4.5 months of inventory at the end of 2009.
As I mentioned above, the market in CPN is performing 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 5.0 months, which is a reduction from 5.9 months at the end of the 3rd quarter and 7.0 months at the end of 2008. Again, 6-8 months of inventory is considered a balanced market. 112 homes sold in this price range in 2009, compared to 113 homes sold in 2008. The volume of sales has continued to stay consistent.
For homes priced between $500,001 and $750,000, inventory is at 10.8 months, which is up from 9.4 months at the end of 2008 and is also up from the 8.7 months at the end of the 3rd quarter. As I mentioned in the 3rd quarter newsletter, I felt the 8.7 months inventory level was deceptive because of several homes being pulled from the market and not relisted. I believed the level was closer to 10-12 months in inventory when adjusting for these homes. The year end inventory level supports that thesis. In general, prices are falling at these price points. 28 homes in this price range sold in 2009 compared to 40 homes selling in 2008, which is a 30% decrease in sales.
For homes priced above $750,001, inventory is at 21.8 months at the end of 2009 compared to 20.3 months at the end of 2008. At the end of the 3rd quarter it was at 32.2 months. My prediction for theses homes continues to be the same as I have predicted 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. 19 homes in this price range sold in 2009 compared to 24 homes selling in 2008, which is a 21% decrease.
If you would like more information on the real estate market in Castle Pines North, Colorado or Douglas County, Colorado, please respond to this blog or contact me with the information provided.