Information provided by Doug Hutchins, Castle Pines real estate specialist, broker associate The Kentwood Company

How’s the real estate market?

The answer depends on the neighborhood and price point for the home. Generally, sales and prices for homes priced under $500,000 were supported in the first half of 2010 by the federal tax credit offered to new and repeat home Buyers. Homes at the high end of the market, which consist of homes priced above $1,000,000, continue to suffer with an over supply of inventory and significant price declines. But real estate is location specific, so each neighborhood must be evaluated separately. When evaluating Castle Pines real estate, three distinct areas become clear – Castle Pines North (CPN), Castle Pines Village (CPV)and Acreage Property (consisting of Surrey Ridge, Charter Oaks, Oak Hills and Happy Canyon).

Castle Pines North

The CPN market is the most stable of these three areas. The average sales price of single family homes in CPN increased 6.3 percent from $476,507 in 2009 to $506,729 in the first half of 2010. However, the majority of this increase has been driven by an increase in the number of homes selling with prices above $500,000 versus actual price appreciation. Twenty-four homes priced at $500,000 or more have sold in the first six months of 2010, compared to only 17 homes selling above $500,000 in the first half of 2009. The total number of homes sold in the first half of 2010 increased 20 percent from 71 homes sold in the first half of 2009 to 85 homes sold in the first half of 2010. It took 109 days on average to sell a home during the first half of 2010 compared to 159 days in 2009.

Months in inventory, which is an indicator of future price movements, was at 8.5 months in Castle Pines North at the end of June 2010. At the end of the first quarter, months in inventory was at 8.8 months, so inventory levels are staying stable. Inventory levels in a balanced market, where prices are neither rising nor falling, are normally between five to eight months. Home prices in CPNshould continue to stay stable for homes priced under $500,000. Homes priced in the $500,000 to $750,000 might see slight reductions in pricing. The higher the sales price is above $750,000, the steeper the price reductions will be based upon the higher inventory levels.

Castle Pines Village

In CPV, the average sales price of single family homes decreased 1.7 percent from $1,045,128 in 2009 to $1,027,152 in the first six months of 2010. Forty-three homes sold in the first half of the year compared to only 30 homes selling in the first half of 2009. The tax credit appeared to have driven additional sales in the first quarter of 2010 since 66 percent of the home sold were priced below $800,000. However, in the second quarter, the tax credit had minimal impact in CPV as only 37 percent of the home sales were priced below $800,000. In the first half of 2010, it took a home in Castle Pines Village an average of 260 days to sell compared to 416 days in 2009.

CPVmonths in inventory is at 23.4 months, which is down from the 25.6 months at the end of the first quarter. This still, though, continues to indicate a significant oversupply of homes in Castle Pines Village and indicates continued substantial price reductions in the future. One characteristic of a declining value market is a substantial difference between the original list price for a home and the final sales price. During the last twelve months, sellers in CPV were selling their homes an average of 21.7 percent below the original list price. In a static market, the discount typically runs from five percent to ten percent off the original list price.

Acerage Properties

The average sales price for homes in the Acreage Properties decreased 36 percent from $535,011 in 2009 to $342,152 for the first half 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. Five homes sold in the Acreage Properties in the first six months of 2010, compared to nine homes selling in all of 2009.

On average, it took 99 days in the first half of 2010 to sell a home in this area compared to 268 days on average in 2009. There is 13.3 months in inventory as of June 30. In general, the sale of acreage property in Douglas County continues to be slow with a substantial oversupply of acreage properties on the market. The good news is that the sales and pricing for acreage properties near Castle Pines are stronger than the properties located south of Castle Rock or east of Castle Rock near Franktown and Elizabeth.

In general, the real estate market in metro Denver has weakened in the last six months of 2010 compared to the first six months. The removal of the tax credit should slow down purchases for the third quarter and pricing will likely suffer depending on the price point and area. Consumer confidence will also play a significant role during the last six months of the year. If confidence in the economy returns, buyers who are waiting on the sidelines will jump into the market before interest rates rise.