The Castle Hills Business Breakfast, held monthly at The Lakes at Castle Hills, provides insight and perspective to the trends and issues affecting Castle Hills and surrounding businesses. This months meeting was no exception, with Bright Realty CEO Chris Bright presenting The Economics of Residential Valuations to a packed audience comprised of The Lakes members and their invited guests.
With 4,239 single-family home lots either built or under development, Bright traced the 18-year history of Castle Hills from an economic standpoint, demonstrating the obstacles that residential developers face in offering marketable product at a price consumers can afford. Bright explained the impact of land prices on new homes and how todays market is limiting the size of lots. The average price for a lot in Castle Hills in 2010 was $61,222, while in 2015 that same lot size price jumped to $90,040. Bright explained how these lot costs, which are passed on to the end buyer, impacts how much home the buyer can afford, making these calculations from a development standpoint increasingly difficult.
Bright also discussed how buyers expectations have changed since Castle Hills first homes were built, introducing the idea of functional obsolescencein which older homes become increasingly obsolete in terms of their functional value as new homes continue to incorporate higher standards of product and energy efficiency. This makes new homes far superior and, more valuable. Bright also explained how increasing land prices impact resale values of existing homes. He believes that in the older sections of Castle Hills, residents can maintain their home values by updating them to current new home offerings. However, even some features cannot be corrected, like a 2-car garage. Its a disadvantage when a home only has a two-car garage, he stated. Today, most families prefer a three-car garage.
In reviewing Bright Realtys plans for future Castle Hills residential development, Bright cited the recent acquisition of the adjoining 100-acre Singer Ranch (70 acres developable), which Bright said was necessary to maintain Castle Hills value. Not buying the land leaves us exposed to what might go up there, he said. Our acquisition of Singer Ranch demonstrates our desire to maintain the value of homes in Castle Hills and the value of the neighborhood.
The Castle Hills Business Breakfasts are a series of informational presentations open to members of The Lakes at Castle Hills, a private country club and golf course. Visit thelakesatcastlehills.com for more information on joining The Lakes.