With 3rd Quarter numbers hot-off-the-press, the Vail Valley real estate market continues to build toward a very solid year. Sales dollar volume is currently up 18% over 2006, which in itself totaled over $2.7 billion. The high end niche of our market continues to show strong gains. As a quick example, sales of properties listed between $1 - $3 million are up almost 20% over two years ago… properties listed between $3 - $5 million are up 62%... properties listed between $5 - $10 million are up 90%... and sales of properties listed at $10 million and greater are up 31% over 2005. With current showing activity strong, I expect this trend to continue through year’s end.

Our sales trends fly in the face of everything one reads in the national headlines, yet tend to hold true throughout the intermountain west, and in luxury markets such as Beverly Hills, Newport Beach and Palm Beach. Each of these markets, as well as many others around the world, attract a clientele that is not overly impacted by interest rate swings, stock market volatility, etc. In fact, many astute individuals see high end resort areas such as the Vail Valley as a “safe haven” in which to place a portion of their funds.

The continued sales activity in our market is being fueled in large part by demographics. The Baby Boomer Generation is now coming into its peak years for acquiring second and third homes, and this trend will continue well into the future. Further fueling our growth is the largest transfer of wealth ever recorded from one generation to another, which has already started taking place and will continue for many years to come. In spite of its recent ups-and-downs, the stock market has created significant wealth over the past few years, and many high net worth individuals are now taking their profits and shifting money into areas such as luxury real estate. The tech market is also rebounding nicely, and is creating a new wave of substantial wealth. Google’s recent stock price of over $700/share, up 34% since mid-September, is but one recent example (I wish that I had bought when they went public!). And lastly, the growing international economy is creating significant wealth in countries such as India and others, many of which we would not have expected just a few years short ago. Again, this wealth is attracted to luxury markets such as Vail.

2005 - 363

2006 - 404

2007 - 475

$1 - $3 million sales

2005 - 290

2006 - 297

2007 - 347

2005 - 50

2006 - 74

2007 - 81

2005 - 21

2006 - 30

2007 - 40

2005 - 3

2006 - 3

2007 - 7

I look at the current uncertainties as having a nominal impact on the high end of our market. Looking back over the past twenty years, we have successfully ridden through storms that many pundits have predicted would derail our real estate market. Black Monday in 1987… the Iraqi invasion of Kuwait in 1990… the Asian financial crises in 1997… the tech market meltdown in 2000, the September 11 attacks… the outbreak of accounting/corporate scandals in 2002… and the outbreak of the second Iraq war… Each of these could have realistically been expected to have a negative impact on Vail Valley real estate. Yet the overall trend in our market has been one of strong activity and growth.

One interesting comparison to consider is as follows… in 1987, Eagle County tallied appx $251 million in real estate sales and 1,326 transactions, which was considered a big year. In 2006, we accomplished $2.75 billion in sales, and over 3,100 transactions!

In summary, Beaver Creek and Bachelor Gulch are essentially built-out, and Vail will soon follow suit upon completion of the $2 billion “renaissance” currently taking place. When combined with the growing demand for premium resort properties, our future remains very bright. While past results do not guarantee future success, I can say that all the pieces are in place to help ensure that we will enjoy many, many years of strong market activity.