Population Demographics:   One out of every four Americans hail from the Baby Boom generation, and these 78 million citizens are spending more and more of their financial resources on travel, leisure, recreation and vacation home ownership. This is all part of their continual quest for an enhanced lifestyle and more family-centered activities. A survey by American Demographic magazine of 25,000 households with incomes in excess of $200,000 indicated that vacation homes are the top desired asset for the wealthiest households in the nation.

Socio Economic Profile:   The National Association of REALTORS® studied the most expensive resorts in the US and discovered that "price elasticity characteristics" allowed world-class destination resorts to outpace the national average rate of appreciation by a factor of 2:1. Breckenridge real estate represents the type of highly ammenitized community such as that which is actively sought after by the most affluent buyers looking to satisfy their thirst for recreation. "Lifestyle and convenience" are more often than not higher on the list of considerations than pricing and physical improvements for this group of buyers, due to the extra demands placed on their time.

The Breckenridge Real Estate Renaissance:   One of the primary criticisms of the ski industry has been its aging infrastructure. The deterioration of certain elements — some of which are approaching 50 years in age — has become a major issue. Hardest hit are the locations in some of the prime, chairlift-centric spots, as they often feature the oldest and most obsolete designs and structures. Affluent customers are more interested in newer and more attractive buildings, which bear designs not often found in the industry but are well represented by Breckenridge condominiums.

Fortunately, when it comes to both redeveloping and modernizing its base core villages, Vail Resorts in tandem with other private developers have spent more than one billion dollars ($1,000,000,000) to lead the way in real estate market improvements being spent at the base of Peaks 7 and 8 in Breckenridge. When contrasted against existing inventory, the effects of these capital investments in Summit County real estate represent a significant amount of property creation in addition to having excellent value-added implications.

Vail Resorts:   Vail Resorts is the undisputed industry leader when it comes to both resort real estate development and ski mountain operations. Currently, the company operates Vail (#1), Breckenridge (#6), Beaver Creek (#8), Keystone (#14) and Heavenly Valley (#17). Vail's proven success formula of stripping market share from competitors by way of heavy capital expenditures on their products, goods and services has worked hand in hand with the industry's maturity and tendency towards consolidation. Most ski towns depend upon the ski mountain itself to be the primary economic driver in their community, and Breckenridge real estate is no exception. This means that the success or failure of the ski company has important implications.

A well-managed corporation that combines a reliable and high quality ski experience with a responsive support structure and vibrant spirit can increase demand and prosperity for an entire ski community. On the other hand, a ski company which negatively impacts demand, such the recent case of the American Ski Company in Steamboat Springs when 1,100 employees were laid off, can have a dire effect on a town. In this example, property values in the area dropped by as much as 13%. The recognized financial strength of Vail Resorts, combined with their forward thinking gives us every indication that their success and dominance in the competitive, consolidating and mature ski resort business will continue on for many years.

Capital Projects:   In December 2006, Vail Resorts announced their newest on-mountain ski village: The Peaks at Breckenridge. The village will include 500 Breckenridge condominiums with an estimated market value of one billion dollars ($1,000,000,000). In order to guarantee the project's beach front status, a new $3m gondola is now operational connecting the base areas of Peaks 7 and 8 with town parking lots, in combination with a realignment of the Independence Super Chairlift.

The estimated sales cycle for this massive undertaking is seven years at an average pro forma price point greater than $1000 per square foot (psf). Prior to the "Peaks" announcement the highest asking price for chairlift adjacent property was the Blue Sky Residence Lodge, located next to the Snowflake chairlift, at approximately $800 psf. The Shock Hill Lodge is a project that has also taken advantage of the new "town to base area gondola" offering 110 super high-end condominiums in a remote Breckenridge area, which is a beautifully preserved location overlooking Cucumber Gulch and the ski area. Asking prices are $1200+ psf, another record setting jump for "best of the best" slope accessible living in the realm of Breckenridge real estate.

Pricing:   The leading edge price indicators are up by more than 50% based upon the Peaks and Shock Hill new release projects. We predict these projects will "pull price" the existing stock of Breckenridge real estate inventory from its current $550 per square foot average, by as much as $200 psf ensuring that the 15 year historical compounded average growth rate (CAGR) of 10% will continue into the foreseeable future. Our rationale for this prediction is based on data analysis where existing property is priced at roughly 75% of new construction offerings.

For the Colorado mountain lifestyle enthusiast, the generally recognized world class resort communities of Aspen and Vail/Beaver Creek are now out of reach financially for the bulk of the vacation home buyer market. Breckenridge real estate and Summit County real estate is attractive and reasonably priced compared to Aspen at $2000 psf, Vail at $1500 psf and Beaver Creek and Bachelor Gulch at $900 and $1000 psf respectively.

Appreciation:   The compounded average growth rate (CAGR) for Summit County real estate since 1991 has been eight percent (8%). Taking a look at the 2004, 2005 and 2006 price increases, however, drives that CAGR much closer to ten percent (10%). This is mostly due to the sale of ski village property. Buyers who have been discouraged by top tier pricing, or their experiences in other, less favorable markets often ask us, "Are we at the top of the market or can prices go even higher?"

In our opinion, Breckenridge condominiums with slopeside adjacent property offer the best upside potential. The value added efforts of Vail Resorts and diverted buyer demand from the now unaffordable ski village areas of Eagle County should either ensure Summit County real estate's historical rate of appreciation or could produce short term windfall gains, provided the market stays in a lock step relationship with its sister resorts.

We are very bullish as to the future of Summit County ski accessible property over the next 10 years and look forward to achieving above market returns for our investor minded clients. In its simplest form, the concept is to buy well located low-cost Breckenridge condominiums. By doing so there is an opportunity to short term rent the properties to vacationing tourists and to benefit from accelerating buyer demand because of Vail Resorts ability to market and develop the ski mountain village. Throughout ownership the market will be controlled and described by a fixed-supply environment with the possibility of windfall profits from the price diverted buyer base newly interested in Breckenridge real estate.