Information and statistics submitted by Doug Hutchins, Castle Pines Real Estate Specialist, Broker Associate – The Kentwood Company

The performance of Castle Pines real estate in the first quarter of 2010 depended upon the price point of the home. Homes priced below $500,000 saw strong sales with prices holding steady or increasing slightly. Homes priced more than $1,000,000 performed poorly with prices continuing to fall due to lack of buyers willing to purchase at the high end.

When evaluating Castle Pines real estate, there are three distinct areas – Castle Pines North (CPN), Castle Pines Village, and Acreage Property
(consisting of Surrey Ridge, Charter Oaks, Oak Hills and Happy Canyon). Each of these areas has unique characteristics, so each market must be evaluated separately.

The average sales price of single-family homes in CPN increased 2.7 percent from $476,507 in 2009 to $489,468 in the first quarter of 2010. The number of homes sold in the first quarter of 2010 increased 39.2 percent from 28 homes sold in the first quarter of 2009 to 39 homes sold in the first quarter of 2010. The increase was driven by the tax credits available to purchasers who placed a home under contract by April 30.

It took 123 days on average to sell a home during the first quarter compared to 159 days in 2009. Months in inventory, which is an indicator of future price movements, was 8.8 months at the end of the first quarter. Inventory levels in a balanced market, where prices are neither rising nor falling, are
normally between six to eight months.

In Castle Pines Village, the average sales price of single-family homes decreased 10.1 percent from $1,045,128 in 2009 to $939,801 in the first quarter of 2010. The high end market continues to struggle as it did in 2009. Buyers who traditionally purchase these higher priced homes are having difficulty obtaining affordable financing and are wary of making a large purchase in the current economic environment.

Twenty-one homes sold in the first quarter compared to 55 homes selling during all of 2009. However, it appears this spike in sales was also driven by the tax credits offered. Homes with a purchase price of less than $800,000 were eligible for the tax credit and 14 of the 21 homes sold had a sales price of less than $800,000. In the first quarter of 2010, homes were on market an average of 246 days before selling, compared to 416 days in 2009. Months in inventory is at 25.6 months, which continues to indicate a significant oversupply of homes in Castle Pines Village and indicates substantial price reductions in the future.

The average sales price of homes in the acreage properties decreased 33.8 percent from $535,011 in 2009 to $353,940 in the first quarter of 2010. However, because the number of homes and number of sales in the acreage properties are so small, the average can be skewed substantially by one or two higher priced sales. Four homes sold in the acreage properties in the first quarter of 2010, compared to only nine homes selling in all of 2009.

In total, though, the acreage properties only have about 300 home sites, compared to more than 1,400 in Castle Pines Village and more than 3,300 in CPN.

In addition, the owners of acreage property tend to stay in their homes longer compared to the owners in a residential neighborhood, so turnover is traditionally very low. On average, it took 121 days in the first quarter to sell a home in this area compared to 268 days on average in 2009.

Although there are positive signs in the real estate market due to the increase in units sold, a portion of the strong first quarter activity was driven by the tax credits offered for first time and repeat home buyers. The tax credits have not been driving new demand, but have made buyers accelerate purchases that would normally have occurred in the second and third quarter. Therefore, the number of homes placed under contract after the tax credit expires on April 30 is expected to drop below last year levels through the end of the third quarter.

For the next six months, prices for homes selling at $500,000 or less are expected to stay steady or slightly increase while the prices of homes selling at $1,000,000 or higher are expected to continue to fall by substantial amounts. These predications are all contingent on interest rates only increasing gradually for the rest of the year. If interest rates were to spike suddenly, the housing market would be impacted significantly with reduced sales and lower pricing at all price points.