In order to study the Castle Pines North, Colorado, real estate market properly, it seems prudent to look at the overall United States real estate market first.
Attached (download here) to this article is the Case-Shiller US market 2008 In Review study comparing annual average price variation on a year to year basis since 1988 and the Average price comparison beginning in 1987.
Notice that the market started it’s down trend in 1989 and reached bottom in 1992. It came back to the 1989 level in 1998, a total of 9 years from the beginning of the decline and 6 years after reaching the bottom.
Another Case-Shiller report (not included in this article) indicated that since the year 1980, there has been an average appreciation rate of 25.5% in each five year increment throughout the US. This report also says that there was an astounding 89% increase from the year 2000 to the year 2005! It is my opinion that the reason for this dramatic upturn is that many people were buying homes they could not afford. This is, of course the reason for the dramatic decline in the market place since 2005. Notice that the decline is 40% since 2005 and was only 20% in 1989-1991 down turn.
A couple of conclusions: First of all, the news reports that the market is “coming back” only means that the losses are less. It does not mean that we are rapidly coming back to appreciating real estate values. The values are still on a decline, only at a slower pace. This is what many government officials are calling good news.
My second conclusion is that we are going to permanently lose 30% to 40% of the buyers that purchased between 2000 and 2005, and they are NOT coming back. They should have not purchased in the first place, and now it appears that those individuals will be financially incapable of qualifying for housing for a long long time, if ever.
The other interesting news is found on page two of the Case-Schiller report. It indicates that average home prices in the US are at similar levels as 2003. I have checked out the Douglas County West market from 2007 to 2009 and have found that the average price per square foot went up in 2008 and down to near the 2007 level in 2009. The trend is down as of this time. This is further verified by looking at the number of sales from January 1 to August 3 of each year beginning in 2007. The number of sales went from 112 in 2007, 71 in 2008, and 40 in 2009.
The above local market (micro) facts are also confirmed when you consider that the months supply of inventory is 64 for ranch style properties in Castle Pines and 30 plus years in the entire Douglas County West area for properties in the medium price ranges and above.
The key local ingredient in all of this suggests that the national real estate market will follow previous trends and stay relatively flat in prices for about 6 more years. This assumes that we have bottomed out at this point and that our average prices will mirror 1990 to 1998.
My strong suggestion is that to sell your Castle Pines North, CO house, one must have their property positioned in the market place as the best one available when considering location, condition and price.
Written by Perry & Co. Real Estate Agent D.J. “Sandy” Colling.
Filed under: Home Selling, Information For Realtors, Market Conditions | Leave a Comment
Tags: Case Shiller, Castle Pines, Castle Pines North, Douglas County, Market Conditions, Perry & Co, Real Estate, Sandy Colling