April Sales Statistics ..

According to the Maryland Association of Realtors, 21 property sale transactions closed in Garrett County during April 2011. This is more or less the same as March 2011 (21) and April 2010 (18). As the table below illustrates, average sold prices (as misleading as they can be) continue to deteriorate (down more than 30% since April 2005). Sales have basically leveled off well below their lofty peak, while inventory continues to build. Months of active inventory at the current sales pace (which we have been reporting for several years and the MAR began reporting for the first time this past month) remains about twice the average level of the past decade and about 8 times more than the halcyon days of April 2005. In addition, pending sales for April 2011 (22) are down significantly relative to March 2011 (32) and April 2010 (32). All signs point to a very weak, even sick, market where buyers continue to have the upper hand and sellers face continued distress; set your (buyer/seller) expectations accordingly.

Don't forget to check back to Dan's Deep Creek Blog for your future updates on Deep Creek real estate statistics.

Garrett County Real Estate Sales by Year Since 1999 ..

Source: MAR

The table shows the big gains of the early 2000s reversing course after 2005. The plunge of the last four or five years has left 2010 total sales dollar volume just above the level from back in 2001, thus making Deep Creek real estate an ill-liquid asset to some and an ill-liquid liability to others. Despite the modest improvement over 2009, the table also shows that 2010 total sales dollar volume was still more than 50% below the level of 2005 transactions in terms of total dollar volume. Throw out the distressed sales and 2010 may have been negative relative to 2009 - a project for another day.

As for those average sales prices, check out this posting on real estate agent math.

Don't forget to check back to Dan's Deep Creek Blog for your future updates on Deep Creek real estate.

Deep Creek Market Update - July 2010

Source: MAR

Somewhat surprisingly, total inventory declined from last month and on a year-over-year basis. However, the magnitude of the monthly decline was not offset by the number of sales, so I suspect this might be a byproduct of a number of properties being temporarily delisted. If this is the case, inventory may have declined while shadow inventory increased.

The number of July 2010 sales was up quite nicely from July 2009, but the MAR data also show that the average selling price declined by 12% from a year earlier. This could be due to a number of local first-time buyers taking advantage of the $8,000 tax credit which would certainly go a long way toward buying a $100,000 or $150,000 house in many of the outlying towns (median selling price was just $217,000). It will be interesting to see if the volume of low-priced sales continues beyond expiration of the tax credit.

Overall, the months of active inventory number ticked up just a bit from the previous month (30 vs 29) as inventory levels remain far above levels seen during most of the previous decade. As President Obama said, this inventory isn't going away overnight.

Don't forget to check back to Dan's Deep Creek Blog for your future updates on Deep Creek real estate.

Deep Creek Market Update - June 2010

Source: MAR

Inventory still growing on a year-over-year basis; sales don't appear to be declining at the previous rate; months of active inventory stabilizing for the time being; plenty of distressed property sales looming.

Don't forget to check back to Dan's Deep Creek Blog for your future updates on Deep Creek real estate.

Garrett County Real Estate Sales by Year Since 1999 ..

Source: MAR

The table shows a big move up in the middle of the decade before the recent plunge leaving 2009 total sales dollar volume below the level of 2001, thus making Deep Creek real estate an ill-liquid asset to some and an ill-liquid liability to others. In a few weeks, data for the first half of 2010 will be available, but through May it seems 2010 isn't much different from 2009--or from 2001 in terms of total transaction dollars.

When time permits, I'll put together a similar table to show growth of short sales and foreclosures as total dollar volume of sales declined. Then we can track these distressed sales as a fraction of the total market and objectively determine if market conditions are improving or deteriorating. Stay tuned.

Don't forget to check back to Dan's Deep Creek Blog for your future updates on Deep Creek real estate.

In 2008, when others said the local market ..

was well and improving daily, I was trying to warn people to proceed with caution. Clearly some didn't have the benefit of my advice; now, this Deep Creek property is back on the market just two years later with the "owners" (more likely their bank and you and I as taxpayers) facing a loss of at least $150k (likely more and growing by the day). It's a shame that so many people get such bad advice.

Don't forget to check back to Dan's Deep Creek Blog for future updates.

Garrett County March 2009 property sales data are now available ..

and you can see that only 13 property transactions occurred in Garrett County in March 2009, down more than 50% from March 2008, but up significantly from the 8 transactions in February 2009. That still leaves about 50 months of inventory based on last month's sales pace, so keep lowering those prices and the buyers will eventually come.

Don't forget to check back to Dan's Deep Creek Blog for future updates.

Full year 2008 real estate sales data should be available any day now ..

so I can provide an update on how second half 2008 sales went to go along with the first half Garrett County real estate data I gave in the middle of last year. Then we will see if there really were "plenty of buyers" as a local real estate agent suggested in May 2008. Stay tuned.

Updated 1/15/09: I guess Mike Kennedy saw my post this morning and decided to give his own update which you can see over at the Railey Realty Blog. Mike shows that the number of properties sold and the total dollar volume of sales in the immediate Deep Creek market in 2008 were both less than half of what they were in 2005. He also shows that the average selling price (neglecting any seller incentives for closing costs, etc.) of the properties sold last year was greater than the year before and then concluded that this means values are still rising. I suppose if next year only the 75 most expensive properties sold but at a significant discount to this year he would also conclude values are still rising. Afterall, the average selling price would be higher. Or if the average house sold in 2009 doubled in size and only sold for 10% more than the average selling price from 2008 by the logic he has laid out he would again conclude that vales are still rising.

Don't be fooled by bad statistics and slight of hand in interchanging price and value. Price is what you pay, value is what you get. It is actually possible values are rising, as they generally do with time, but it is just as possible the prices people have paid in 2006 and 2007 and even 2008 are significantly greater than the true value of the underlying assets. So prices can fall even while values rise believe it or not. As it turns out average selling price is just a really bad valuation metric. Don't believe me? Ask someone who bought stock in a tech company in early 2000 when people like Mike Kennedy said they were worth (valued at) whatever price someone would pay for them. Just because those companies were selling at astronomically high prices didn't mean their values based on metrics such as future cash flow were keeping pace (as we all found out).

Looking at apples to apples comparisons of individual properties sold in 2005 and 2006 to the same properties resold in 2008 I'm having a hard time finding any that are selling for more now than they did 2-3 years ago. As I have said before, I believe for average selling prices that Mike is reporting to keep rising he has to rely on bigger new construction sales (or a different weighting of the mix of sales) to skew his data. He has shown nothing to convince me or anyone else otherwise.

I wonder if Mike honestly thinks that he sold the Cedar Creek townhouse for more in 2008 than he could have in 2006? I have my doubts. Agents are discounting their own properties and in some cases selling at a loss yet they say values are rising. If so they must be the dumbest people on the planet for lowering their prices or selling for less than they previously paid. Or, like me, they understand that prices got far ahead of values.

Don't forget to check back to Dan's Deep Creek Blog for future updates.

Price change alert ..

33 CRESCENT SHORES Rd SWANTON, MD 21561 courtesy of Redfin.com.

Original List Price: May 16, 2008, $624,900
Recent List Price: December 3, 2008, $459,900
New List Price: January 13, 2009, $449,000
Purchase Price: January 2005: $340,000 (still some room to lower the current price).

Now priced at 72% of original list price from May 2008. Of course as most of my knowledgeable readers know the initial price and the actual value may be two completely different things so this still doesn't necessarily mean the price is right here but it's one way to filter through the volumes of listed properties. Then you really dig in, do your homework and see what makes sense. If anything though it may point to a desperate seller which is exactly where you want to look if you are looking for the right price especially when others are likely inflating list prices knowing in advance that buyers are driving tough bargains in this market.

Based on the popularity of these list price updates I think I'm going to make this a regular addition to the blog. Stay tuned for more unfiltered Deep Creek real estate news and updates right here at Dan's Deep Creek Blog. Any property in the immediate Deep Creek area that shows up on Redfin with a total price reduction of at least $50,000 or at least 10% I'll post here for my readers. If you are specifically looking for deeply discounted properties just check back now and then and click on the recent price changes link at the top of the page for the latest rundown. Likewise, these updates will provide readers with a sense of the current trends in the market that have largely been ignored in the market updates given by local real estate agents.

Don't forget to check back to Dan's Deep Creek Blog for future updates.

New price change this week ..

for 335 HICKORY RIDGE Ln SWANTON, MD 21561 courtesy of Redfin.com.

Listed October 22, 2007: $1,190,000
Price Change August 14, 2008: $949,000
Price Change/Relist November 14, 2008: $899,000
Price Change January 5, 2009: $875,000

Luxury "lakefront" and now over 25% below original list price from Fall 2007. So in very simple terms if you had purchased this property at full list price 15 months ago using a 25% down payment totalling $297,500 and 75% financing (fairly conservative 3 to 1 leverage by today's standards), you'd have negative equity today. Well and improving daily indeed. And to think that people complain about their 401(k) account being down 40% when in this case my late 2007 buyer would be down greater than 100% on their "investment" using the same mark to market accounting methods.

Don't forget to check back to Dan's Deep Creek Blog for future updates.

Agent-owned lakefront and chasing the market down as well ..

662 WATERFRONT GREENS Dr #LOT 49 SWANTON, MD 21561 down $240,000 (-17%) since April. I guess sellers shouldn't feel bad since some agents have no clue when it comes to "right pricing" a listing either.

Don't forget to check back to Dan's Deep Creek Blog for future updates.

Now this is a real price reduction ..

originally listed May 22, 2008 and on December 1, 2008 was marked down to $649,000 from $849,000. That's nearly a 25% price reduction made in a single day and took the list price well below the previous sold price of $800,000 in 2006. This might finally be a clear signal that some people are no longer living in the fantasy world where Deep Creek real estate appreciates no matter what happens in the rest of the world. Or it's just another out-of-town distressed seller who got in over their head with an interest-only ARM at the peak of the market. Or both. Adding up the projected loss on the resale and all the taxes, commissions and interest payments over about 30 months this turned out to be one expensive vacation rental for these folks at 93 BRENNEMAN Ln MCHENRY, MD 21541 (I'm guessing around $8000/month maybe even $9000/month)!!!

Here's another at 21 BOULDER RIDGE Dr MCHENRY, MD 21541. Original list, $1,150,000, current list, $825,000 (down close to 30%).

And another at 15 MOUNTAIN OVERLOOK Ct #3 MCHENRY, MD 21541 marked down by $100,000 (more than 11%) after only 1 month on the market. The owner of this one is a real estate agent as well, so I guess you could say this is one agent who doesn't have his/her head in the sand since they are willing to admit prices have to come down to move inventory.

Look around, I'm sure there are many more examples out there. Now the question is how low might they have to go for buyers to finally see a reason to buy? Looks like those deep discounts I predicted that might be necessary to clear excess inventory are finally getting started.

Don't forget to check back to Dan's Deep Creek Blog for future updates.

Turns out the Deep Creek market does have at least one 1000+ day listing as well ..

see it right here. Recall that shortly before the end of 2008 I mentioned that things could be a lot worse and linked to another blog in CA about a house which had been on the market for more than 1000 days. At that time I did not realize the same situation also existed in the Deep Creek market, but after doing my homework I guess all I can say is that at least there are not more 1000+ day listings. Although there are some others fast approaching the 1000 days on the market milestone, including this lakefront home. Even more shocking, the list price today is only moderately lower than it was back in 2006. Talk about waiting for your price.

On another note, I just discovered this Redfin.com website, but it is a very powerful tool with a great deal of information for would-be home buyers. A lot of the information available on this site such as days on the market, original list price and previous sold price is not readily available when doing a search using only a broker's website. I guess they want to hold something back so that you don't find out all of this on your own.

Don't forget to check back to Dan's Deep Creek Blog for future updates.

On an apples to apples basis it appears as if Deep Creek real estate prices are back to 2004-2005 levels ..

at least judging from this recently sold existing lake access property.

2008 List Price: $989,000
2008 Sold Price: $907,500
2005 Sold Price: $915,000

Same house, same location, same size, same expansive lake views, same level yard, same fireplaces, same price (well almost). Three and a half years later and no appreciation (instead slight depreciation). Moral of the story, don't be fooled by the "appreciation" numbers which include averages of new construction homes that are significantly larger (and thus cost more to build) than in years past. Likewise, one must be careful not to include renovation costs in appreciation data if an existing home was extensively updated at a large cost to the previous owner. If I were buying in this market, I'd be very weary of phony appreciation numbers and really ask myself what a given property would have sold for in 2004. Then maybe all of those who have been saying it has been a good time to buy for over a year now might be on to something, of course what they generally leave out is that you just need to turn back time on those prices. I'll keep watching for more evidence that prices are stagnating or falling and post occasional market updates. Stay tuned.

Don't forget to check back to Dan's Deep Creek Blog for future updates.

Deep Creek short sale property sells for nearly 15% below list price ..

see for yourself right here. One less property for sale in the bloated local inventory which stood at 708 properties as of the end of November.

I've profiled this property in a previous Deek Creek market update posting and suggested that potential buyers who were genuinely looking to purchase a property at Deep Creek Lake at a bargain price take a serious look at these properties being listed by distressed sellers. In this case it looks like those sellers could have been you and me, the US taxpayers, since IndyMac originally issued this bad loan and was later taken over by the FDIC.

Don't forget to check back to Dan's Deep Creek Blog for future updates.

Update: November real estate sales data are now available from the MAR ..

and the number at the top of this page has been updated to reflect the new data. For some perspective, I also took the time to put together a graph of exactly how this number has varied over the last four years. From the graph below (click for larger view) you can see that the number of months of available inventory (based on November 2008 inventory and sales pace) are the third highest in the four year period, trailing only January 2008 and July 2008. These numbers certainly bear watching so stay tuned for more Deep Creek market updates.



Don't forget to check back to Dan's Deep Creek Blog for future updates.

Another opportunity to follow the lead of the local Deep Creek real estate agents ..

and in this case if you can't sell your house, just rent it. In May this agent assured me that this property would sell for "$380,000+" even though at the time I believe it was listed for $399,900. Today, the property is listed for $380,000- and still hasn't sold and it appears the owner/agent is unwilling to lower the price further. Thus, it has found its way on to the local rental market to help cover the carrying costs with interest payments, HOA fees, taxes, insurance, utilities, etc. of roughly $2200 per month (at least until the interest only ARM resets and those carrying costs increase). Of course, if you are not an agent yourself you might find it hard to find an agent willing to work around the rental schedule in trying to show and eventually sell your property.

Obviously this band-aid solution is not for everyone and at some point you definitely have to consider whether it's worth lowering the price to free yourself from carrying costs and hassles. Afterall, if all the for sale properties in the Deep Creek market became rentals overnight there would be a glut of rental properties available and rental rates would likely decline as well. Just another interesting observation I made while browsing the happenings of the Deep Creek real estate market.

Don't forget to check back to Dan's Deep Creek Blog for future updates.

One of the most popular articles in today's Wall Street Journal ..

sounds a lot like what I've been trying to tell people here. Maybe James R. Hagerty in Pittsburgh has been keeping tabs on this blog as well. Read his piece entitled "The Future for Home Prices: Americans still see real estate as their best shot at wealth. It may be wishful thinking" at the Wall Street Journal online.

"Those hoping for a quick rebound are likely to be disappointed. Economists and other pros generally say home prices won't bottom out before the second half of 2009, and some don't see a bottom until 2011 or 2012. Even when they stop falling, prices may scrape along the bottom of the rut for years."

"Some experts say it's a bad idea to count on your home rising in value at all. People should think of their own homes mainly as places to live, not as investments, advises Kenneth Rosen, chairman of the Fisher Center for Real Estate at the University of California, Berkeley."

That second quotation seems to be exactly the opposite of those ads you see on TV from the NAR these days (more great comments on the same ad here). Wow, NAR credibility might be only thing that has fallen more than Lehman Brothers or Bear Stearns. So who do you believe? Realtors using statistics from 1995 or an expert like Mr. Ken Rosen?

Another interesting article by Mr. Hagerty in January of this year suggesting, as I have with the Deep Creek real estate market, that the national housing downturn has lagged in some areas of the country. He also discusses rising inventories and declining prices of all things.

Don't forget to check back to Dan's Deep Creek Blog for future updates.

In another part of the country the story is sales volume up, median sales price way down ..

could this also be in store for the Deep Creek real estate sales market as sales volume picks up to clear the excess inventory? Some extent of this is exactly what basic economic theory would predict. Stay tuned.

Don't forget to check back to Dan's Deep Creek Blog for future updates.

By all accounts, October 2002 would have been a great time to "invest" in real estate in the Deep Creek area ..

well let's look at some numbers from way back then and see how they compare to today. Just click on the link under the number at the top of the page and then proceed to October 2002. You will see that October 2002 witnessed 54 sales in Garrett County (compared to only 36 for October 2008) while active inventory was only 288 (compared to 723 in October 2008). The difference is rather stark.

October 2002 saw a market quickly turning over active listings such that there were only about 5 months of active inventory at that time. The market was under-supplied and there was a nearly shortage of properties available to willing and able buyers. By contrast, in October 2008, properties are staying on the market longer as the market is dramatically oversaturated compared to six years prior. The market is over-supplied and there are a glut of properties available relative to the number of willing and able buyers. So if people try to tell you that all this inventory means it's a great time to buy (for any reason other than you have A LOT of choices and might be able to get a deal on a foreclosure or short sale) just remember that in October 2002 inventory was significantly less than now and as we have seen that really was a great time to buy an "investment" property.

Don't forget to check back to Dan's Deep Creek Blog for future updates.