Market Summary

LIMITED SUPPLY OF DEVELOPMENT PROPERTY The Telluride Region is surrounded by federally controlled property (USFS and BLM) limiting future growth to approximately 14,000 private acres. Virtually all of the private ground is subject to a master plan which allows for the development of fewer than 4,000 single family equivalents on about one third (1/3rd) of the above mentioned ground. This density is but a small fraction of allowable densities in other major resorts and it is this assurance of future controlled growth that positively drives the market place both with regard to volume and value. QUALITY CONTROL The Town of Telluride is a designated National Historic District, and as such, its architectural integrity and the quality of future development are ensured by the National Trust for Historic Preservation and locally, by the Historical and Architectural Review Commission with its set of strict guidelines. The quality of future development in the Telluride Mountain Village is assured through its detailed Design Review Guidelines, which are enforced by the Telluride Mountain Village Resort Association. The initial projects developed in the Village have certainly set the tone for many upscale projects presently being reviewed by the Design Review Board. RARE PHYSICAL BEAUTY The Telluride region is blessed with a most dramatic scenic backdrop. Much has been written in a variety of publications concerning the raw beauty of Telluride, e.g., In a family of beauties, Telluride is the most stunning - Boston Globe, November 1989. In addition, nature's topographical layout enables three mountains and two towns to be joined by one ski area and a high-speed gondola transportation system. This plan has a European flair and, above all, diminishes the need for the bus and automobile. It is also unique that the Telluride Company, master developer of the Telluride Mountain Village and Ski Area owner/operator, controls property mid-mountain on its ski area. This enables the Village project to be entirely ski-in and ski-out with a commercial core possessing perfect Southwest solar exposure. According to statistics compiled by Telluride Consulting, between 1985 and 1996, gross sales in San Miguel County increased from $54.3 million to over $174.3 million, and between 1997 and 2006 total sales increased from $212.5 million to $681.9 million. Just as important as this long term increase in sales, is the significant appreciation over the past five years. In 2002, the region recorded $319.2 million in sales, while the total volume in 2006 rose to $681.9 million for an impressive compound annual growth rate of 21%. The following seven categories of property substantiate steadily increasing values of real estate in the region: Mountain Village Residential Lots The average price for a single-family lot in the Town of Mountain Village in 2002 was $624,000. This average has increased by 56% to nearly $973,300 in 2006 with a compound annual growth rate of 9%. It is also noteworthy that premium sites that sold in 2002 for around $1 million to $2 million are now commanding prices from $2 million to $3 million. Mountain Village Homes The average price paid for a single family home in the Town of Mountain Village in 2002 was $3,016,600. The average price in 2006 was $3,445,000, with the highest priced sale at $11,685,000, exceeded by a recent sale in July, 2007 at $13,041,240. Over the past five years, the average price of a Mountain Village home has increased by 14%, with a compound annual growth rate of 3%. Mountain Village Condominiums The average price for finished condominiums in the Town of Mountain Village has increased from $535,800 in 2002 to $1,309,000 in 2006. This translates into a five-year increase in average price of 144% and a compound annual growth rate of 20%. Recently, upscale unit sales have reached as high as $1,616 per square foot, with the most expensive Mountain Village condominium sale reaching $4,800,000 in 2006. Town of Telluride Residential Lots The average cost per residential Telluride homesite (1-2 lots) in 2002 was $526,800. In 2006, residential lots in town sold for an average of $1,265,000, which computes to a compound annual growth rate of 19% per year over the past five years, and a stunning 140% overall increase in average price per sale. This is the first time that the average residential homesite in Telluride exceeded the cost of a single-family site in Mountain Village. Town of Telluride Homes Single-family residences in 2002 sold for an average cost of approximately $1,167,700. The average cost of a home in Telluride in 2006 was $2,742,900, which represents a compound annual growth rate of 19% per year and an 135% overall increase in average price. Recent high sales have exceeded $1690 per square foot, and the most expensive Town of Telluride residence in history sold for $6,900,000 in 2006. NOTE: Sales statistics for the average cost of Telluride homes can vary widely year to year in relation to the number of tear-downs which are purchased for their land value only at very low dollars per improved square foot. Town of Telluride Condominiums 2005 set new record highs for condominium sales in historic Telluride with 3 sales exceeding $3 million, the highest being $3,375,000. Four condo sales exceeded $2,000,000 in 2006, and six sales exceeded $1,000 per square foot. Average prices have increased from $370,500 to $805,200 for a compound annual growth rate of 17% over the past five years, with a 117% overall increase in average price since 2002. Newly built units achieve price levels as high as $1074 per square foot. Ranch Properties in the Telluride Region Sales activity of larger acreage in the Greater Telluride Region has been a significant segment of the marketplace over the past five years. Sales of 25 to 40 acre parcels from 2002 through 2006 have ranged from an average price per acre of $26,700 to $40,800, with a new high price per acre of nearly $160,000 in 2006. Larger parcels, from 40 to 75 acres recorded an average price of $6,300 per acre to $23,500 per acre. Parcels from 75 to 200 acres in size sold in San Miguel County, showed a similar range during this five-year period selling from an average of $6,500 to $24,000 per acre, with a high price paid of over $87,000 per acre. Major ranches ranging from 500 to 4,000 acres have sold for an average price per acre of $5,400, and ranging from $2,700 to nearly $7,400 per acre over the past five years.