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.

By: Mike Kennedy March 6th, 2008 Category: Deep Creek Lake Real Estate

Attention all you investor type buyers. This real estate listing just went back on the market  - it’s located at 79 Cedar Shores and is being offered for $1,345,000. It’s a vacation rental home and is professionally managed by Railey Mountain Lake Vacations. The rental name is Cedar Chateau.

It has 8 bedrooms (6 of them being Master Suites), a 27 foot indoor pool, 10 flat screen TV’s, and is fully furnished. The property does have access to Deep Creek Lake but does not come with a deeded boat slip. You have views of the lake and Wisp Ski Resort and the house is complimented with interior finished hardwoods, cathedral ceilings, and 2 native stone fireplaces.

For all you investor types out there - this house generated a little over $107,000 in gross rents for all of 2007. The main reason it did such high rents is (1) because it has an indoor pool and (2) the newer construction/quality of the home’s interior. A good rental house does not have to directly located on Deep Creek Lake. The rental houses with indoor pools can command premium rents and renters will pay extra to have nicer amenities. We Realtors like to refer to these types of houses as the “Pool Houses” - and since their are only a handful in our entire market they usually attract a great deal of attention from our investor type buyers.

Give us a call or shoot us an e-mail - any of our sales agents would be more than happy to explain how the vacation rental program works and the associated costs and expenses of owning a investment property like this.

By: Mike Kennedy March 1st, 2008 Category: Deep Creek Lake Real Estate, Wisp Ski Resort

Some more quality exposure for Deep Creek Lake and Wisp Ski Resort. It’s nice to see the area getting the attention of a national publication and a Baltimore television station as of late. Here is a link to an article about the area that appeared in the Spring 2008 issue of Luxury Living Magazine.

It is interesting to note that the author of the article lives in Park City, Utah - which is another resort area with a much larger ski area than the Wisp. The author really has nothing but good things to say about the area and favorably compares the lifestyle and activities offered at Deep Creek Lake to those found at the larger western resorts. 

The author does touch on a few real estate items in the article. She notes that a brand new home at Deep Creek Lake that costs $1.3 million would be considered a “steal” in Park City - where $1.3 million would only you buy a 2 bedroom fixer upper. Sure Park City and some of the other bigger resorts are larger than the Wisp - but Deep Creek Lake is much more accessible and easy to get to for someone from Baltimore, Washington D.C., or Pittsburgh.

We have many clients who own vacation homes here and in other resort areas - and speaking with them they always tell us they spend more time here at their Deep Creek Lake house than at their other vacation homes in other resort areas. When you factor in ease of accessibility, the lifestyle offered, and what you can get for the money - there is no doubt buying a second home at Deep Creek Lake is a great value compared to other resort areas.