By: Mike Kennedy February 19th, 2008 Category: Deep Creek Lake Real Estate, Fractional Ownership

One of the newer trends in our real estate market here at Deep Creek Lake has been the introduction of fractional ownership. The first fractional offering was developed by a company called Second Homes at DCL. This concept has been a little slow to catch on in this market  - there have only been a handful of fractional sales in the past year or so. But fractionals are huge in other resort markets - like Park City Utah, Steamboat Colorado, and Vail to name just a few. It’s only a matter of time until the fractional concept catches on here at Deep Creek Lake and Garrett County. 

What is fractional ownership? In a nutshell, it’s owning a fee simple ownership percentage in a property - the most common in our market being a 1/6th ownership. For your share you get the ability to use that property 1/6th of the year - or in other words 8 weeks out of the year - (52 week less 4 weeks reserved for maintenance divided by 6 fractions). And then the 8 weeks you can use it usually get broken down by the season - you can use the house for 2 weeks in the summer, 2 weeks in the fall, 2 weeks in the winter, and 2 weeks in the spring.

Pros & Cons - It’s important to note these are NOT Timeshares or Residence Clubs. These properties are fully furnished, fully decorated and ready to go when you arrive at it - all the way down to having a full roll of toilet paper hanging in the bathrooms. Other than buying groceries you will spend no time maintaining the property….no cutting grass, no changing light bulbs, painting, etc. 

While this fractional concept isn’t for everyone looking to buy a vacation or second home - it does open up a unique opportunity for those looking to purchase something they may have not had the means to do on their own. Basically, it makes these types of properties more affordable. For a little over $329,000 you can buy part of and enjoy all the benefits of a lakefront home that would normally cost well over $1,000,000 by itself. And you can split the ongoing costs and maintenance expenses - like real estate taxes, HOA dues, and utilities - six different ways now. On the flip side though, you do only get to use the property 8 weeks out of the year…..but most survey’s show that vacation home owners only use their properties 8-10 weeks each year anyways. And if you decide your deeded interest can be sold, willed, or gifted at a later date.

Current Offerings - If you are still interested please contact us about the current fractional ownership opportunities in this market. We are the only real estate company in the area right now offering fractionals. Below are some of our offerings - it’s a nice mix of the different types of properties you can find at Deep Creek Lake;

• 1/6th of a lakefront home in Waterfront Green for sale for $329,000
• 1/6th of a lakefront townhome at the brand new Creekside condominiums for $259,900
• 1/6th of a lake view townhome at Overlook Villas for $259,900
• 1/6th of a lake access home with indoor pool at Cedar Shores for $299,000
• 1/6th of a lake area duplex style townhome at Northlake Village for $119,900

In future posts about this topic, we’ll work through some of the math and show you how all the numbers work - and we’ll also try to better explain how the usage rotation works as well - but until then please use this post as a starting point to better understand this unique concept in property ownership.

By: Mike Kennedy February 16th, 2008 Category: Deep Creek Lake Real Estate, Interest Rates and Loans

In order to stimulate the economy and the national housing market, President Bush recently signed House Bill HR 5140 - which may raise the conforming loan limit to as high as $729,750. This new bill could quite possibly have an impact in our local real estate market here at Deep Creek Lake in the near future.

 The current conforming loan limit is $417,000 - if you borrow over that amount you the wind up in what lenders will usually call a Jumbo Loan - and to balance out risk for these lenders - Jumbo Loans usually have interest rates 0.50% to 0.75% higher than conforming loans.

This stimulus package gives HUD the ability to raise the conforming loan amount within the next 30 days to as high as $729,750….and the ability to implement the new limit in certain markets - the big questions yet to be answered are “how much” and “where”. 

Hopefully these higher loan limits will be enacted here in the Garrett County and the Deep Creek Lake areas. If so interest rates will drastically improve for those financing vacation and second homes in our market. Most of our lake access homes right now are priced between $500,000 and $1,000,000 - and most of our lake front homes are priced over $1,000,000.  These higher loan limits will surely give those shopping for vacation homes in our market better financing options than what they had before - better financing options will more than likely spur on a few more potential buyers who may have been sitting on the fence - more potential buyers will surely stimulate our number of vacation home sales this year.

According to the article there is still a lot of grey area to be worked out - hopefully it works in the favor of those thinking about buying a vacation or second home this year.

By: Mike Kennedy February 14th, 2008 Category: Deep Creek Lake Market Update, Deep Creek Lake Real Estate

Like most other resort markets around the country the Deep Creek Lake and Garrett County Maryland real estate market for the year ending in 2007 can be summed up in the following sentence…..Total Number of Sales Down, Average Sold Price Up.

So the question then becomes - Was Deep Creek Lake a good real estate market in 2007 or not? The answer really depends on who you ask - if you already own property here your value went up again in 2007 so their answer would be that it’s still a very good market…if you ask someone who tried to sell their property last year you would probably get a mixed reaction - most still ended up selling for what they wanted but it certainly took a little longer to get there….if you ask any local Realtor they would probably tell you the market stinks - of course they would be saying that because less sales equaled less money in their pockets last year - or in simple terms, bad for us - not so bad for our current clients, still good for past clients.

Below is a snapshot of what occurred in our market in 2007;

                                     No. of Homes Sold          Avg. Sold Price

                                   2006               2007         2006              2007

Deep Creek Lake        308                 215        $537,498      $559,168

All of Garrett County   510                 374        $396,499      $400,460

(Includes DCL)

It’s important to note that the Deep Creek Lake numbers above include everything residential in nature - homes, town homes, condos, and a few fractional ownership sales we had. It also includes a wide variety of different locations and settings within the lake market - lakefront properties, lake access properties, lake view properties, Wisp Ski Resort properties, and properties that have no access to the lake but are just in the general vicinity. Those different types of properties can vary greatly in value.

The big question we get asked now - Is it a good time to buy at Deep Creek Lake?

For those of you thinking about buying we truly believe now is probably as good of a time as there is to seriously consider buying in this area. The fundamentals are still very much in place for future appreciation - but we probably won’t see the extremely high appreciation rates we saw earlier this decade. That’s for sure.

Why is it still a good time to buy? The main factor is inventory - if our inventory of lakefront and lake access homes remains low into the future - which it should because the entire lake is almost fully developed now - prices should continue up. There is no reason to believe our inventory will ever get that high on and around the lake - there are only a few parcels left that could possibly be developed. If you talk to anyone who has been around this market their entire life they would probably concur that prices have always gone up at Deep Creek Lake - ever since it’s inception in 1925. It’s very hard to go back in history and find a time that real estate values ever went down at Deep Creek Lake.

When will the number of sales start to go back up again? It’s hard to say really - the experts predict we won’t see a positive trend in the number sales until 2009 at the earliest. From what we’ve seen so far, 2008 is starting off a lot like 2007 did. We have our normal amount of potential buyers who want to buy a vacation home for personal use and have the means to do it - it seems we lost that group of people who were buying for speculation, quick flipping, and who might have been stretching themselves financially to make it happen. Those people seemed to have disappeared over the last year or so. The national media has made a lot people think that buying real estate is a bad thing to do right now - this situation won’t change until the perception shifts back to real estate being the “cool” or “in” thing to do again. But the smart buyers are the ones buying now - before things heat back up.

Some other interesting real estate happenings that occurred in our market in 2007 -

• A new record sold price for a lakefront home was set in 2007 - a new construction spec house in The Reserve at Holy Cross sold for $2,830,000.
• Two homes sold for over $2 Million in 2007 - in 2006 only one home sold for over $2 Million in this market.
• In 2007 there were 22 homes that sold for $1 Million or more - in 2006 there were 30 homes that sold for over $1 Million.

By: Mike Kennedy February 4th, 2008 Category: Deep Creek Lake Real Estate

Cathy Mateer, who works for the Maryland Department of General Services, has notified us that the State of Maryland is essentially shutting off the Deep Creek Lake Buy-Down Project in June of 2008.

What is the Buy-Down Project you ask?  In a nutshell - when the state of Maryland bought Deep Creek Lake in 1998 they basically bought the real estate and land that makes up the bed of the lake and a buffer strip of land of at least 25 feet in width around the entire perimeter of the lake. The state paid $9.8 million to purchase this land back in 98. In order to recoup some of this $9.8 million the state has offered adjacent landowners the opportunity to”buy-down” or purchase some of this buffer strip from the state.

The good news is that if you are a lakefront property owner the state has sold or will sell you a portion of their buffer strip for $0.39 a sq foot - which is a pretty cheap price for land. The bad news is that a conservation easement is placed on this parcel of land when you buy it. This easement basically prohibits you from cutting any vegetation (trees) or building any permanent structures on this parcel - or in other words you can’t really do anything with the land eventhough you own it! You won’t be able to cut trees so you can get a better view of the water.

From what we know about 80% of the lakefront property owners around Deep Creek Lake took the state up on this offer over the past 7 or 8 years since this project has been in existence. That’s not really surprising considering the average “buy-down” parcel cost somewhere in the neighborhood of $5,000. Since the amount of land you could buy is based on elevations - the steeper properties offered less land and hence less of a price tag - and the flatter properties around the lake were a little more expensive.

Over the past several years a lot of our past customers whom we have sold lakefront property to will  ask us - “Why should I spend money on property I can’t do anything with?? Do I really need to do this?”

Our answer back is usually along these lines - “No, you really don’t need to do this - you obviously can’t do anything with this land - however, this will be probably your one chance to buy down closer to the water at a pretty cheap price. And if you ever had to re-sell your property this buy-down parcel is just one more positive thing or amenity you can offer.”

Relating this back to real estate, overall we have witnessed that doing the “buy-down” has turned out to somewhat of a good thing for those that have sold their lakefront properties since this project has been around. For those that did it, most got all their money back out at the time they transferred their property to the new buyers - kind along the same lines of a kitchen remodel or other renovation. By having the buy-down to offer it’s just one less question mark a potential buyer will have to deal with.

If you haven’t done the buy-down yet or are still considering doing it you may have some time left. You can contact Cathy Mateer at (410) 767-5764 or e-mail her at catherine.mateer@dgs.state.md.us for more information. From what we know they are trying to finalize any existing contract by June 2008. After June 2008, you will no longer have the ability to purchase this land.