Well researched and well put. The thing that stands out for me in this discussion is the unquantifiable value of creating memories and adventures with friends and loved ones in such a unique and wonderful place that is Deep Creek Lake, MD. Although profit can be gained and even occasionally lost, a house is not a bank or a stock really. It is a place that can provide quality times to enjoy in our short ltime here. This, to disagree slightly with Sam, is what people really need to consider for there vacation home investment.

Keep up the good work.

Thanks for your comments.

Unfortunately a lot of investors - especially those with 401k’s, IRA’s, and mutual funds - did not sell last fall - and probably 99% of all investors in this country are unaware on how to even use limit prices and other advanced trading techniques to lock in gains or minimize losses. A big part of the problem I believe is that our current educational system is greatly lacking any type of financial education for all kids coming up through the schools - public or private.

But whether the investor sold his shares or not is not the point I was trying to make.

The main points I was trying to make are (1) that stock values have been extremely volatile as of late - the value of real estate on Deep Creek Lake has not exhibited this same volatile behavior and (2) investing in a second home at Deep Creek Lake also includes some additional benefits - such as an improvement in one’s lifestyle and activities - benefits that owning stocks do not offer.

While I certainly cannot speculate on the future value of Berkshire stock - or any stock for that matter - I can certainly comment on the fundamentals that are still in place at Deep Creek Lake and why I think real estate here is still a good value today.

- About 63 of the 65 miles of shoreline around Deep Creek Lake has already developed. The only two remaining large acreage parcels that could developed and subdivided into lakefront lots or lake access properties is Thousand Acres and Pergin Farm. Both families have developed these parcels very slowly over the years. No one expects that to change anytime soon.
- A great majority of the current set of property owners around the lake could be classified as wealthy people - they are medical professionals, lawyers, small to medium sized business owners, executives at large companies, and those with higher ranking government jobs. We know who these people are - we’ve been selling them property for over 30 years now. You certainly get to know what people do for a living when you sell them a house. These are people and families who haven’t been greatly impacted by this national downturn or real estate bubble. In fact one might be able to argue that these people have been hurt the most recently by the stock market. With our aging population and litigious society these professions should continue to be less impacted if the national economy takes longer than expected to improve.
- A good percentage of the property owners around the lake do not have mortgages against these properties - and if they do have a mortgage it’s not that sizable in comparison to their level of income. Lenders for these types of properties in this particular area do not have a lot of risky loans (i.e. stated income, arms, etc.) on the books right now unlike other real estate markets that have led to foreclosures and drops in values.
- In addition most of these properties have now been in their families for years now. Like I’ve stated in previous posts the main reason most of them decide to sell their Deep Creek property is that they simply don’t use the property anymore. Distress sales have always been very minimal in this market. Sure we have some distress situations like divorces, short sales, and foreclosures but they are still very minimal in this market.
- Historically, lakefront values on Deep Creek have gone up over time and are still holding steady even after one year into a major national recession - and after the great real estate bubble burst in a majority of other markets around the country. Other resort markets like Florida, North Carolina, and the ski resorts out west have seen property values drop by as much as 50%! Most old timers around the lake will tell you that property values here have held steady even during the recessions experienced in the 70s’, 80’s, and early 90’s. We’ve recently seen a small decline in some property values in areas surrounding the lake - not on the lake - but nothing like what other markets have experienced.
- 9 million people live within a 3 hour drive of Deep Creek Lake and Garrett County and 25 million people live within a 6 hour drive. This is a drive-to market that is extremely accessible now that I-68 is complete. No commercial flying or long drives are necessary. People can leave their professions and places of work by 5 pm on a Friday and be here by 8 pm. This area is a great convenience for those people seeking a vacation home.
- The new administration has proposed generous government spending over the next few years. If history is any indicator most government spending usually stays in the Washington D.C. and northern Virginia areas. Some people will capitalize on this government spending and more wealth will be created for consultants and other business owners in these areas which very well could create a whole new set of buyers for the Deep Creek market in the future.
- And most importantly Deep Creek Lake is the only true four season resort in the entire Mid-Atlantic region with an abundance of recreational activities. What other market in the eastern United States is so close to so many people and metropolitan areas that offers so many recreational activities?

The fundamentals above should keep the lakefront inventory level in the historical range that it’s always been in - somewhere between 50 and 100 properties for sale at any given time. Steady inventory and continued demand should equal rising values over time. As with real estate here I’m sure there are some great long term value buys in the stock market right now as well - and over the long term (10, 20, 30 years or more) both types of assets should turn out to be really good. But once again I will ask - if someone with a long term outlook had the cash on hand right now - would they rather put their money in the stock market that has demonstrated some recently volatility wiping out 10 year gains or would they rather purchase real estate here at Deep Creek that has not shown any extreme volatility or declines in value yet?

I certainly hope I did not come off like I am arguing with you. That is not my intention. I am very much thankful you have continued this discussion. Please feel free to comment in this blog in the future. Everyone’s insights and opinions are valued and much appreciated.