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.

Garrett County Market Update ..

Yesterday I was reading about new home sales on a national level being down by a wide margin in both number and sales price on a year-over-year basis. Buried in the data was a tidbit about the inventory of unsold homes would take over 10 months to burn through at the current pace of sales. You can probably guess that this made me curious above the inventory levels and current pace of sales in the Garrett County market, so I did some searching and found this website from the Maryland Association of Realtors which provides just such data for all of Maryland's counties.

Here's what I discovered. This time last year in Garrett County there were 514 active listings (inventory) and the monthly rate of sales for May 2007 was 31, thus Garrett County had 16.58 months of active inventory (which in itself was up significantly from 2006 and 2005). Fast forward to 2008, now the current number of active listings is 721 and the number of sales for May 2008 was 26, thus Garrett County now has 27.73 months of active inventory. This means that at the current pace of sales even if no new spec houses were built and listed for sale and no additional existing homes were listed for sale it would take 27.73 months (until approximately Labor Day 2010) to burn through the existing inventory of unsold homes/properties. Well and improving daily, indeed!

With numbers like that I wouldn't even think about making a full price offer at this point. Buyers certainly have A LOT of negotiating power though. The situation looks pretty bleak for those pre-foreclosures I'm seeing on foreclosures.com and RealtyTrac given that they have little or no chance to let the market absorb their property sale prior to going into full-blown foreclosure or being forced into a short sale or auction situation. These special situations might help a buyer get a discount while helping the seller get out from under a crushing burden of debt so in a way it's a win-win situation and definitely worth checking into if you are in the market.

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

New tool on the blog and a new market update ..

months ago after becoming disillusioned by a lot of bad information being spread across the web I started digging up real data and crunching some numbers myself to see if others were telling you the real story or simply pedaling some worn out company advertising aimed to mislead people into buying something so that they might profit. Along those same lines, I have added a new tool to the top of this blog that allows visitors to instaneously see the number of months of active real estate inventory in Garrett County. This calculation, much like the numbers reported nationally by the NAR, is the result of dividing the current active inventory by the previous month's sales volume. The result is the number of months it would take to exhaust current inventory at the previous month's sale pace assuming no new properties come to the market and no current listings are pulled from the market before a sale is made. Easy enough right?

Over time, users will be able to see how this number fluctuates or moves up and down, thus giving one indication as to whether the market is improving or not. In October 2006, when the local market was much stronger, this number was about 11.5 and considerably lower than the current 20 shown at the top of the page. May 2008 offered a similar big increase over May 2007 as I previously reported in another Garrett County market update.

And finally just for comparison sake here is a table of active inventory by month for all of 2006-2008:



The general trend has definitely been up (particularly in the same months of different years), but as always this will bear watching, so stay tuned. Perhaps people have finally realized that the Deep Creek market is oversaturated and inventory levels are finally leveling off in reponse. Since we know that these types of trends don't change overnight, it looks like it could be another long winter for those who are hoping to be sellers in the Deep Creek market. Gradually though things will improve .. eventually they have to.

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.

More high-priced properties emerging from Deep Creek shadow inventory

1100 SOUTH BLAKESLEE relisted April 2, 2011 for $1,895,000; previously delisted on January 15, 2011.

85 HERON COVE WEST Rd relisted April 3, 2011 for $859,000; previously delisted on August 1, 2010. This is the third time this property has been listed for sale since 2008.

Just as a story from CBS MoneyWatch suggests that the housing market is three times worse than you think. Part of that logic is based on massive shadow inventory and another part is based on increasing levels of distress. According to this graphic, Maryland now has the third highest level of distressed inventory in terms of mortgages that are 90 days or more late relative to monthly sales (ahead of the former housing bust poster-child states of FL, CA, and NV).

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

Deep Creek Lake and Garrett County real estate sales update ..

September sales data for each of Maryland's counties are now available at the MAR website. Click here to see some previous updates on the Deep Creek real estate market. Looking at the Garrett County data specifically one can notice that the number of sales for September 2008 was greater than in September 2007 while at the same time both median and average sales prices were down. The more telling number in my opinion, however, is the inventory data. While statewide inventory levels have essentially stabilized over the past year, Garrett County's September 2008 inventory (758) is significantly higher than a year earlier (590). I can't know for certain, but I suspect this further supports my hypothesis that the Garrett County market, consisting of a large second home segment, tends to lag other markets around the region. Time will tell if this bears out so I will continue to follow the numbers to see if the recovery in Garrett County also lags the recovery in the markets where second home buyers actually reside.

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

"Inventory Rises, if Not Sales" ..

ALTHOUGH the prices of Manhattan apartments have remained high so far in the fourth quarter, figures on inventory and new listings illustrate a sharp deterioration in the market as the economy and consumer confidence fell.

Read more in the NY TImes about how experts expect price declines to follow rising inventory. One could assume they might have something similar to say about other markets with large inventories of unsold properties.

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

After browsing the 2010 distressed properties list I realized that ..

a shocking number of previously profiled properties were delisted in the final quarter of 2010. Here's a sample of the properties that went from active inventory to shadow inventory.

2087 STOCKSLAGER Rd: most recent list price: $575,000, original list price: $698,750. Listing says "reduced from $599K to $575K thru 12/31/10. Must close by the end of 2010 for this price," as if the price is mysteriously going to rise if it has not sold by the end of the year. I hope no one falls for this joke. Delisted December 31, 2010.

915 DEEP CREEK Dr: recent list price: $650,000, 2005 sold price: $700,000. Delisted December 28, 2010.

2 STILWATER Dr: seller offering to hold first mortgage, recent list price: $799,000, 2005 sold price: $865,000. Reduced another $25,000 on August 30, 2010 - now $130,000 less than August 2009 list price. Delisted December 13, 2010.

8 PHEASANT RUN Rd: short sale, land. Delisted December 12, 2010.

209 HIDDEN VALLEY Ln: most recent list price: $220,000, original list price: $315,000, 2003 sold price: $195,000. After 1000 days on the market, list price is approaching 2003 sold price. Delisted November 30, 2010.

611 MARSH HILL Rd #1: most recent list price: $1,185,000, 2008 sold price: $1,325,000. Delisted November 30, 2010.

20899 GARRETT Hwy: recent list price: $465,000, 2006 sold price: $475,000, list indicates motivated seller, bring all offers. Price reduced August 21, 2010 moving this listing from the "on the verge" list to the actively distressed list. Delisted November 25, 2010.

188 MEDALLION DRIVE Rd: short sale. Delisted November 24, 2010.

19868 GARRETT Hwy: most recent list price: $598,800, 2002 sold price: $600,000. Recently priced below 2002 sold price. Delisted November 22, 2010.

115 WOODLAND Way: most recent list price: $279,000, 2005 sold price: $295,000. Delisted November 19, 2010.

335 MOUNTAIN VIEW Dr: most recent list price: $588,900, 2006 sold price: $675,000. Delisted November 18, 2010.

788 FOXTOWN Rd: recent list price: $297,000, 2005 sold price: $329,900. Delisted October 28, 2010.

209 2ND St: short sale. Price reduced August 10, 2010. Delisted October 5, 2010.

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

Signs that things were ever well and improving daily are few and far between ..

Given that local real estate agents are once again trying to pump up the market and tell you that now is a good time to buy, I thought I'd follow up on one of my first posts on this blog and provide a historical view of May inventory levels and sales in the Garrett County real estate market.

Source: MAR

Fewer sales, more inventory. The trend certainly doesn't look good for all those distressed sellers out there, does it? Of course, savvy buyers who have been able to stay on the sidelines and resist the past three years of cheerleading from local agents are now poised to take advantage of lower pricing (below 2004-2005 levels in some cases) and more choices.

After reading the comments in the "cheerleading" link above, does anyone still think that in 2008 I was wrong about where the market was likely headed?

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.

To Quote Rebecca Black, It's Friday, Friday ..

and that means it's time for another week's edition of the Deep Creek price change spotlight. This week's spotlight is focused on a property in the Kendall Camp community that we've previously profiled and is none other than 200 KENDALL CAMP Cir. Originally listed in 2009 for $689,900, now priced at $584,900. The current list price is also below the price the current owners paid for the property back in 2008. Listing indicates established rental history. After 444 days on the market and price reductions already totaling $105,000 (or more than 15% of the original list price), that rental income might be the only thing keeping this reluctant landlord afloat.

Also notice that the link to the previously profiled Kendall Camp property shows that it was delisted without selling (even after significant price cuts). Add another to the growing list of properties moving from active inventory into the Deep Creek shadow inventory.

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

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.

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.

Somehow I missed this last week ..

but another interesting piece in the USA Today on the history and potential future of the US real estate market. I guess you could say this is bad news for all those who used "creative financing" to buy second homes at Deep Creek Lake at the peak of the market, but with all the bailout programs in the works or still coming maybe all these debts will just magically go away. Read the full story from the USA Today entitled "Why home values may take decades to recover". If you click on the link to the charts under "Anatomy of a crisis" you'll also see some historical inventory charts not unlike the one I have linked at the top of this page for the Deep Creek market specifically. I also found it interesting that on a national level an inventory of 6 months is considered a healthy market. That begs the question what would the Realtors put that number at for the Deep Creek market? I'm guessing it would be considerably less than the current 37, perhaps more like 8-9 tops. There are a lot of interesting thoughts and charts enclosed in the links so check them out if you are a follower of the housing market.

Meanwhile, on a slightly different note, last week I also read on another blog that the current state of the economy is good news for Wisp ski resort and should increase revenue this season (as if it were likely or a given that this would happen). A good snow season might help increase revenues at Wisp this year but I highly doubt the folks at Wisp are counting on a banner year unless we get a really good snow season. The basic premise of the argument was that people are avoiding taking longer more expensive trips to western ski resorts and instead finding closer alternatives. While that may be the case for a select few, those following this logic also have to consider that some of the previous pool of regular visitors to Wisp may choose to stay home altogether. As it is however, I can only assume that this writer believes middle income people are less affected by the economic downturn than those higher up the scale who could previously afford regular ski trips to Vail or other western destinations. It's mindboggling the kind of logic (or lack thereof) you can find online these days.

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

Some links for those questioning my motivation in writing this blog ..

June 2008

If you want to question what is written here in a thoughtful manner be my guest, all opinions are welcomed.

June 2008

Now what was that I was reading about property values being up and the DCL market being "well and improving daily". Obviously this is only one property but this observer is unconvinced that the market for existing houses has improved at all since 2006.

July 2008

Contrary to something I read on a Deep Creek real estate blog at the end of May, the credit crisis is still with us.

After reading that particular comment in May, I knew something had to be done to prevent such misinformation from being distributed as if it were truth. I will continue to do just that.

September 2008

After seeing so much misleading information out there urging consumers to risk their own future so that someone else could profit I felt compelled to create this website and offer an alternative to what I felt was a constant stream of bad or misleading information. Today, much less misinformation is finding its way online in Garrett County, so in that respect this blog has been a far greater success than I initally imagined. Thank you all for continuing to keep tabs on what is posted here and for sharing your own thoughts as well.

November 2008

My simple hypothesis is, and has been, that prices will have to come down considerably for supply and demand to meet. So if this proves to be true as it has been in many other parts of the country (and in previous bubbles), now is not necessarily a good time to be a buyer. Generally, I have avoided saying it was a good/bad time to buy and instead encouraged readers to use their negotiating power which by all accounts is currently in a bull market.

If someone wants to buy a piece of property they are free to do so for whatever reason they would like, however, I don't think they should be "talked into it" by someone claiming now is a great time to buy based on incomplete and misleading information or advertising. Compare my blog to other Deep Creek real estate blogs that claimed the market was "strong" and "well and improving daily" and that the credit crisis was over in May and then decide who has credibility and who doesn't.

March 2009

Here at this blog we don't need to make sales so we are free to tell you the real story instead of passing off the latest canned sales and marketing pitch as honest and objective analysis. You won't hear "buy now" here, but you will get real inventory numbers (which I noted last year were exploding while others were still in denial) and real analysis of what it all means. I've also used real numbers to show you that statements such as "even if home prices continue to decline they will not go low enough to compensate for the increase in interest rates to come" are just flat wrong.

June 2010

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.

June 2010

Signs that things were ever well and improving daily are few and far between. Given that local real estate agents are once again trying to pump up the market and tell you that now is a good time to buy, I thought I'd follow up on one of my first posts on this blog and provide a historical view of May inventory levels and sales in the Garrett County real estate market.

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

Update: Garrett County Market Update ..

Revisiting the May 2008 housing statistics we can see that both average and median sales prices were down significantly in Garrett County from a year earlier while inventory was up dramatically. In a previous posting I focused mostly on the inventory numbers, but given some things I've read recently about average sales prices showing that property values are clearly rising in Garrett County I thought I should revisit the topic. Based on May 2008 data, the year-over-year decline in the average sales price of Garrett County real estate was 42.8% while the median sales price declined 47.4%. In each case, these declines were the greatest in the entire state of Maryland. Clearly, this shows that Garrett County property values took quite a beating in May 2008.

More likely, this clearly shows that the average sales price of a small group of properties has very little to do with property values of a much larger group of properties which can vary widely in terms of lot size, square footage, workmanship, location, amenities, etc. The June 2008 data are now out as well, so check back soon for an even more recent picture of the Garrett County market. Clearly things could stand to improve greatly over what had to be considered an awful month of May for those who chose to believe that average sales prices over a window in time correlate directly with individual property values.

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

President Obama comments on real estate market today ..

Overbuilding in the boom years that preceded the economic recession has resulted in too many houses available for the level of demand, the president said.

"It is going to take time to absorb this inventory that is just too high," Obama said. "There's no quick way to do it."

Continue reading.

Sounds familar, no? Maybe he's been reading Dan's Deep Creek Blog and some of my previous comments on Deep Creek real estate inventory levels.

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

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.

Another Deep Creek Property Sale Closes

May 2008 list price: $285,000
October 2008 list price: $270,000
March 2009 list price: $249,500
May 2010 list price: $199,000
April 2011 sold price: $150,000

139 FREDERICK Cir can be a lesson for buyers and sellers alike. For buyers, don't be afraid to wait for the right price; for sellers, things aren't as "well and improving daily" as the Deep Creek real estate agents will tell you.

At the same time, MAR monthly sales data are out today and as expected Deep Creek inventory is once again on the rise (since more properties came on the market than were sold in March). Stay tuned to see how high it goes and how many more properties come out of the Deep Creek shadow inventory.

Assuming no new properties come on the market, at the 2009/2010 pace of sales (250-300 per year) it would take more than two years just to sell all the properties currently listed for sale. By now, I would think most sellers realize a quick sale isn't likely (unless the price comes down dramatically as was the case with the subject property).

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

Garrett County Housing Starts Down Dramatically ..

This week's edition of the Republican Newspaper reports that the number of housing permits issued in the first half of 2008 is down 20% from the prior year. I actually took a minute to make the table you see below based on the data provided in the story and while the 20% decline from last year is rather large it pales in comparison to the nearly 50% decline in permits issued from the first half of 2004 to the first half of 2008. The good news for anyone trying to sell a home right now, however, is that builders are realizing there is a severe glut of unsold properties right now and are no longer willing to add to that glut. I discussed the unsold inventory of properties and subsequent price declines in Garrett County based on May 2008 data in a pair of earlier postings. As bad as that data was for May 2008, believe it or not June 2008 inventory was higher with sales slower, certainly suggesting that a pullback in new construction was unavoidable and necessary at the same time.



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