By: Mike Kennedy May 1st, 2008 Category: Deep Creek Lake Market Update

The first quarter of 2008 is officially in the books for the Deep Creek Lake real estate market. Not to anyone’s surprise the first quarter of this year was a lot like the first quarter in 2007. All market signals are starting to point that 2008 will be a lot like 2007 - which was slight decrease or stable amount of transactions the rest of the year - but overall modest appreciation gains for most property owners. In 2007 things started off slow like this year but really picked up during our traditionally strong selling season of June, July, and August. A quick summary of the market is below;

Homes Sold

Thru the first quarter of 2008, 34 homes in the Deep Creek Lake area have sold with an average sold price of $637,929 - this compares to 37 homes sold in the first quarter of 2007 with an average sold price of $537,565 - a difference of only 3 homes.  These homes include all lakefront, lake access, and lake area homes.

Lots/Land

 Thu the first quarter of 2008, 18 lots have sold in the Deep Creek Lake area broken down as follows - 1 lakefront lot, 6 lake access lot, and 11 lake area lots. This compares to 21 lots sold in 2007 - 0 lakefront lots, 4 lake access lots, and 17 lake area lots.

Contracts

Currently, there are 17 residential properties under contract - 7 lakefront homes, 4 lake access homes, 2 homes a top Wisp Ski Resort, and  4 lake area homes. The highest demand thus far this year has been the higher-end lakefront homes with good settings - private Type A dock, deep water, good views, wooded, with a newer home.

 Future Factors

There are some factors on the horizon that could make the demand stronger for real estate at Deep Creek Lake and Garrett County for the rest of the year. These include;

• More vacation rentals already booked for the 2008 summer season. Some renters turn into buyers - or most renters will go back home and tell their friends, familiy, and neigbors what a great place Deep Creek Lake is. That usually spurs more people to explore real estate opportunities in this market.
• Interest rates continue to remain relatively low. Jumbo loan rates as of today are still in the mid-to low 6% range - still very low historically speaking.
•  Continued improvements to the area. A few new restaurants should be open before the start of the summer and the proposed Aqua Mountain indoor waterpark is still in the works even though plans have not yet been finalized and construction is not yet guaranteed.  

By: Mike Kennedy April 23rd, 2008 Category: Deep Creek Lake, Garrett County News, News

Be on the lookout for some new businesses and restaurants to pop up around the Deep Creek Lake area this upcoming summer season.

• A Ledo Pizza is going in the McHenry Plaza on the northern end of Deep Creek near the Wisp Resort. Ledo’s is one of the larger, more popular pizza chains in the Washington D.C. area. They are projecting an opening date sometime in June 2008.
• The cabins behind the proposed Aqua Mountain Resort indoor water park are now being constructed. The site for this proposed indoor water park and rental cabins will be along Rt. 219 in McHenry right beside the Garrett County Fairgrounds.
• Sorellees Pizza Pub and Ice Cream Parlor is now open for business. Sorellees is located south of Deep Creek Lake on Rt. 219 right across from Little Sandy’s Restaurant near Sand Flat Road. Very good, fresh tasting pizza. They also sell groceries and ice cream.
• A new boat cover, upholstery, and canvas repair shop is opening south of the lake as well. This new business is going to be called Deep Creek Canvas and will be located on Spring Glade Road near Oakland, Maryland. Call (301) 501-0676 if you are in the market for a new boat cover.
• Cedarworks of Deep Creek Lake is moving offices to our old sales office near the Rt. 219 Bridge. They sell complete Lindal cedar home packages.   

Unlike other real estate markets - people looking to buy or rent a vacation house at Deep Creek Lake usually take into consideration the quality and diversity of the restaurants in the area. Restaurants are important features in a resort market like ours. Any new restaurants and attractions, such as the proposed indoor water park, will certainly help continue to bring more and more visitors to the Deep Creek Maryland area.

By: Mike Kennedy April 17th, 2008 Category: Deep Creek Lake Buyer Info, Vacation Rentals

If you currently own a vacation rental home at Deep Creek Lake or considering purchasing one - there are a few interesting trends and insights that continue to evolve in our resort real estate market.

RENTAL BOOKINGS UP

Railey Mountain Lake Vacations reports that rental bookings are up about 7% this year compared to last year - even with the price of gas reaching record highs. Most local business owners have said that the Deep Creek Lake area actually benefits when the price of gas goes up - the reason being is that vacationers from Baltimore/DC and Pittsburgh actually choose to drive the shorter distance to Deep Creek for their summer vacation as opposed to the Outer Banks, Myrtle Beach, the Grand Canyon, or Disney World in Florida.

Larger Rental Homes Still Doing Well

Another trend reported is that the larger homes (8 or 9 bedrooms), with amenities such as an indoor pool, are still doing extremely well - and most continue to see annual owner gross rents increase. In fact one of the larger “pool houses” with an incredible lake view will probably generate gross rents in excess of $200,000 in 2008 - which would be the first time a rental home has broken that barrier. This proves that you don’t really have to be lakefront to be one of the better rental homes - an incredible lake view is something most renters desire.  Since most of these larger rental homes get rented on the weekends during the non-summer months - Railey Mountain Lake Vacations is now pushing mid-week corporate retreats that will probably increase the gross rents even higher in these homes.

The “WOW” Factors

If you are considering purchasing a vacation home at Deep Creek Lake and want to maximize rental revenue below are the ”wow” factors that make a good vacation rental home;

• Updated and Above Average Decor - this may be the most important thing to have in your home. Renters want a certain standard of furnishings in a home they rent. This can make a tremendous difference in the amount of rental income you can generate.
• Lake Front or Lake Access Setting.
• Log Cabin - people really like that warm, cozy feeling of a cabin in the woods.
• Big Views of the Lake or Mountains - people want to be blown away by a view they can’t get back at home.
• Private Indoor Pool.
• Home Theatre.

Some factors that detract renters - or the “Un-Wow” factors (if that is such a word);

• The setting is “too” residential.
• Duplex/Townhouse/or Condo - most renters want privacy on their vacation.
• The Interior and Decor are below minimal standards.
• No Access to Deep Creek Lake.

Real Estate Opportunities

Railey Mountain Lake Vacations reports their is still great rental demand for larger rental homes at Deep Creek Lake - 8 bedrooms or more. Our inventory of larger rental homes has not grown much at all since 2003 when more restrictive zoning measures were enacted. Their are still opportunities in this current real estate market to take advantage of this trend. You could (1) buy an existing rental home for sale that already has good rents, (2) buy a really good lot and build, or (3) buy an existing home for sale and modify it so it can be a good rental. Finding an existing rental home with a high rental history is sometimes difficult - the good ones usually get snapped up right way. The more likely path to owning a good rental home would be to either build a new house or renovate an existing one. New construction obviously has a time element involved - but there are currently some really good lake view lots for sale at price points that could make sense building a new house - even if you have the added cost of a sprinkler system and other fire code measures that are required today.

Modifying or renovating an existing house is certainly another option to consider. One of our clients purchased a lake access home with a decent view of the lake a year or so ago - then added an indoor pool and now has annual gross rents exceeding $90,000. 

We hope these vacation rental trends continue. No one would have ever predicted the houses with indoor pools would have annual gross rents between $150,000-$200,000 - but it is happening. What’s the next big thing for these rental homes? Who knows - maybe an indoor bowling lane?

By: JonBell April 12th, 2008 Category: Garrett County News

Governor Martin O’Malley held a news conference in the Savage River State Forest this morning to announce that his administration will not allow commercial wind turbines to be built on Maryland State Forest Land. O’Malley Stated that “While we must continue to explore and make progress on creating a more sustainable and independent energy future for Maryland, we will not do so at the expense of the special lands we hold in the public trust”

The debate to build wind turbines in Garrett State forest became popular to all Maryland Residents when the Baltimore Sun published its Dec 6th 2007 article stating “A Pennsylvania company is asking the O’Malley administration for leases in two Western Maryland state forests so it can clear up to 400 mountaintop acres to build about 100 wind turbines.”

After today’s news conference David Dishneau of WTOPnews.com wrote that “Opponents had claimed that allowing 40-story windmills on state-owned land in mountainous western Maryland would reduce its recreational value, spoil the landscape and lower property values, especially in the thriving Deep Creek Lake resort area of Garrett County.”

Click here to read the full WTOPnews.com article.

By: Mike Kennedy April 10th, 2008 Category: Deep Creek Lake Real Estate

In 2007, Deep Creek Lake area properties south of the Rt. 219 bridge were reassessed. In 2008, the lake area properties north of the Rt. 219 bridge will be reassessed - this will include those of you who own property along Marsh Hill Road, atop Wisp Ski Resort, Deep Creek Drive, Lakeshore Drive, Stockslager Road, Shingle Camp Road, and Sandy Beach to name but a few neighborhoods. In 2009, all other areas of Garrett County will be reassessed.

Below are the average increases reported by the Assessors Office from their 2007 assessment;

• Lakefront Land                                                                  12%
• Lakefront w/Improvements (meaning it has a house)       33%
• Lake Access Land                                                              36% 
• Lake Access w/Improvements                                           42%
• Lake Influence Land (meaning it has just a lake view)      36%
• Lake Influence w/Improvements                                       40%
• Deep Creek Condos and TownHomes                               22%     

The Assessors Office uses the prior 12 months of actual sales as the basis of their assessments. However, when viewing these numbers keep in mind the increases are shown over a three year period since the last reassessment in 2004 - which was right in the middle of a very strong real estate market here at Deep Creek Lake.

These reassessments conducted in 2007 became effective January 1, 2008 and will be the basis for the tax bills that will be sent out on July 1, 2008. Also, these assessment increases are phased in over 3 years at 1/3 of the increase per year. However, if you are permanent resident of Garrett County the Homestead Credit Law now limits any property tax increase to just 5% - something very beneficial to those who qualify.

By: Mike Kennedy April 3rd, 2008 Category: Deep Creek Lake Real Estate

The Deep Creek Lake Maryland area was just recently named “Best Four Season Spot” by Forbes Magazine. The article appeared yesterday in the online edition of Forbes and quoted our own Railey Realty salesperson Adam Cowgill. The article’s “In Depth” slideshow also displays one of our lakefront homes for sale, listed by Jon Bell - a $3.3 million custom home on Paradise Point Road.

Very rarely does the Deep Creek Lake real estate market get the national media attention it deserves. It’s nice to finally see a respected media company such as Forbes take notice of the Deep Creek Lake/Garrett County area and favorably compare us to such bigger named resort areas as Lake Tahoe, Bal Harbour Florida, Telluride, the Hamptons, and Hawaii.

By: Mike Kennedy March 28th, 2008 Category: Deep Creek Lake Buyer Info, Deep Creek Lake Market Update, Deep Creek Lake Real Estate

An article about buying a vacation home recently appeared on the CNN/Money.com website. It’s a pretty good article - and is basically about how right now is a good time to buy a vacation or second home. The author also does a good job of giving tips on how to buy a second home - from identifying the primary reasons you may want to buy a second home to suggesting that you first rent in a resort area to see how well you like it before taking the plunge and buying. 

We certainly agree with the main aspect of the article - that it is a great time to buy property at Deep Creek Lake and in Garrett County - interest rates are down and demand certainly isn’t as high as we had previously seen during our boom years just a few years earlier. These two factors can certainly help the chances of a prospective buyer getting better terms. In fact at the end of last week one of our clients locked in an interest rate of 5.625% on a conforming loan that they will be using to purchase their lake view vacation home.

However, there are a few things to point out in this article that just don’t relate to the Deep Creek Lake real estate market.

First, the author tries to generalize that all second home markets are “soft” right now. While demand is down slightly from our boom years - “soft” is hardly the case here now. Just in the last three weeks we have closed on a lakefront house at Sandy Beach for $1,379,000 (that had competing offers), a timber frame home atop Wisp Ski Resort for $1,250,000, a lakefront house on Marsh Hill Road for $880,000, and two other lakefront homes for $865,000 and $750,000 respectively. And just today one lakefront house in our market had 3 competing offers! I would hardly classify this type of activity as being “soft”.

Another thing the author tries to generalize is that the appreciation rates in all resort/second homes markets declined in 2007 - or are expected to decline in the near future. Once again, that’s not accurate for the Deep Creek Lake market. In 2007, the average sold price for a residential property in the Deep Creek Lake area was up approximately 4% over the average sold price in 2006 - from $537,498 to $559,168 - a modest gain - but at least a gain unlike other second home markets.  It is accurate to say that the value of a piece of property at Deep Creek Lake has held up much better than a property in other resort markets - such as Las Vegas, the Atlantic Coastal beach areas, and Florida just to name a few. This fact is just another reason to buy here at Deep Creek Lake - where historically the appreciation rates have done much better and should continue to do better than other resort areas. The main reason being that the lake is almost fully developed now - there just a few smaller tracts of land that have frontage on Deep Creek Lake or have access that can ever be developed in the future. Low inventory and continued demand should continue to fuel appreciation for lakefront and lake access homes in our market.

By: Mike Kennedy March 26th, 2008 Category: Deep Creek Lake Market Update

We would like to take this opportunity to give our opinion and clear up a few misconceptions and misinformation about the condition of the real estate market in Garrett County.  The old adage “if it seems too good to be true, it probably is” used in the article of March 6, 2008 in The Republican may be applicable in certain situations. (Unfortunately this article is not online and can not be linked to.) The old adage “don’t believe everything you read” may also be applicable.  Contrary to the opinions of some, the real estate market in Garrett County is alive and well and quite frankly improving each and every day. 

There is no doubt that 2007 was a year for Garrett County real estate companies, as well as buyers and sellers of Garrett County properties, to re-evaluate strategies, do some belt tightening, and find innovative ways to market their properties.  The real estate market in Garrett County over the past 20 or so years has been nothing short of amazing.  National publications have called the Deep Creek Lake real estate market one of the hottest in the east. The last several years have continued that trend and we have been in a boom market since the early 1990’s.  Any downturn at all from those highs was bound to be a shock to buyers, sellers, real estate agents, and real estate companies.  While the number of transactions in Garrett County were down in 2007 from 2006, it would have been very difficult, in any market, to sustain those levels generated over the past three or four years.  Even though the total number of sales was down, listed below are some facts that we would like to share with you.

• According to our MLS, the Metropolitan Regional Information System, the average marketing time for properties in 2007 was roughly the same as the previous five years in both the Deep Creek Lake and the Garrett County residential markets.
• The average sales price for a residential property in Garrett County actually increased in 2007 over 2006 - and so far in 2008 has increased again, roughly 21% over the previous year.
• The average sales price for a residential property in the Deep Creek Lake area also increased in 2007 over 2006 - and so far in 2008 has increased again, roughly 19% over the previous year.

What does all this information tell us? It tells us that the market isn’t as bad as the “doom and gloom” people would have you believe.  There are hundreds of ways to look at statistics and manipulate them into what you want to believe.  At Railey Realty, we choose to believe that Garrett County and Deep Creek Lake real estate is still one of the best investments a person can make, no matter how hard the national news networks are trying to convince us otherwise.

In our opinion, 2008 is looking to be a great year for real estate sales in Garrett County.  Because there are so many “spin off” businesses that rely on the real estate industry, we hope and believe they will also have a banner year.  If the last couple of months turn out to be a good barometer of what will happen in 2008, everyone in the county should benefit from the increase in real estate activity.  Our agents have been very busy recently showing properties to prospective buyers.  They have been busy listing new properties.  They have been busy writing offers and contracts.  As an owner and the Broker of Railey Realty, I am extremely excited about what lies ahead in 2008.  We look forward to continuing our efforts to help hundreds of families each year realize the “American Dream” of home ownership.

Sincerely,

Kevin D. Liller

Railey Realty

By: Mike Kennedy March 14th, 2008 Category: 1031 Tax Deferred Exchanges, Deep Creek Lake Real Estate

This past week the IRS released a ruling that finally addresses some of the questions surrounding vacation and second homes and how they can qualify as a safe harbor in a 1031 tax deferred exchange. A 1031 tax deferred exchange is very common at Deep Creek Lake because of the mixture of homes that make up our market - a majority of vacation homes around the lake are used strictly for personal use on weekends, holidays, and summers - but we also have many homes where the owners will use the property for their own personal enjoyment and also rent it out as a vacation rental.

Previously, their has been a lot of grey area on this subject - the questions most asked were “How much personal use is too much if I want my property to qualify?” and “How long do I have to hold this property before it qualifies?”

With this ruling the IRS now says that if you own a vacation home and have some personal use in it, you should own it for at least two years before an exchange, rent it out at fair market value for at least 14 days in each of the 2 years, and limit personal use to 14 days or 10% of the days rented, whichever is greater. If you follow these guidelines and standards, the IRS states they will not challenge whether or not your property qualifies for a 1031 exchange.

The bottom line is that this is pretty good news for certain people looking to buy or sell a second home at Deep Creek Lake. This ruling can provide much more flexibility to someone down the road looking to change locations. For example, someone who now owns condo in Ocean City - uses it occasionally and has followed the rules above - can now sell that property, pay no taxes on any gain, and then buy something at Deep Creek Lake. However, it must be pointed out that the replacement property would also have to meet the standards above and a few other rules as well to qualify.

Disclaimer - as always this post should not be construed as any type of tax or legal advice. Consult with your CPA or Tax Attorney regarding for further explanation on these types of transactions.

By: Mike Kennedy March 11th, 2008 Category: Uncategorized

Since our blog is mostly about real estate happenings in and around the Deep Creek Lake area, we wanted to tell you about another blog that reports on all the other things happening and going on at the lake that aren’t necessarily real estate related. This new blog is called The Deep Creek Blog and is authored by Becky Sciullo. Becky’s family has owned lake property for many years and she has spent her whole life vacationing at Deep Creek.

She does a great job reporting all the local news, happenings, things-to-do, and events that are going on in the Deep Creek Lake area. For second home owners who only come up on weekends, her blog is great way to stay current with everything that is happening in Garrett County.

On a side note, her father paints and produces some incredible art work of the different scenes found in and around Deep Creek Lake and Garrett County. You can view his work here. How many of you remember Thayer’s Barn, the old Glendale Bridge, and Cabin Lodge? I can remember the old Glendale Bridge and the fact that it was “one way” only! You had to pull your car up to the entrance, look down to make sure no one else was coming the other way, and then you could go. Thayer’s Barn and Cabin Lodge were before my time, but I’m fairly certain Thayer’s Barn burnt down and was located where the Creamery is now along Route 219.