Seven Hills Annual Report

THE SEVEN HILLS REPORT®

Quarter Ended September 30, 2004

A defi nitive analysis of Seven Hills custom and executive real estate activity

• Terracina • Rapallo • Venezia • Portofi no • Villa Cortina • Renaissance • Presidio • Villagio • Palazzo Monte • Palantine Hill

B e t h N a e f O w n e r / B r o k e r

KPrime Realty, Ltd 11201 S. Eastern Ave, Suite 100 702.682.6529 Beth Naef Owner / Broker [email protected] www.PrimeRealtyNV.com

THE SEVEN HILLS REPORTA defi nitive analysis of Seven Hills custom and executive real estate activity

Quarter Ended September 30, 2004Portofi no • Rapallo • Terracina • Venezia • Villa Cortina

Palazzo Monte • Palantine Hill • Presidio • Renaissance • Villagio

INTRODUCTION

This comprehensive analysis focuses exclusively on the custom and executive neighborhoods within the prestigious Seven Hills master planned community. Specifi cally, with respect to closed properties, this edition of THE SEVEN HILLS REPORT® measures the change in real estate activity between the quarter ended September 30, 2004 and the quarter’s ended June 30, 2004 and September 30, 2003 respectively. Additionally, with respect to currently listed properties, we look at potential trends in asking prices, selling prices, square footage and inventory absorption.

On a neighborhood-by-neighborhood basis, the following key economic indicators are compared and evaluated:

• Dollar Volume• Median Sales Price• Median Asking Price• Median Adjusted Asking Price• Average Square Footage• Number of Sales• Inventory• Median Sales Price per Square-Foot• Median Asking Price per Square-Foot• Median Adjusted Asking Price per Square-Foot• Average Number of Days-on-the-Market• Average Percentage of Asking Price to Sales Price

Analysis of the custom communities includes both the comparison of the homes and home-sites on a neighborhood-by-neighborhood basis as well as a comparison of “Like Properties” to “Like Properties” regardless of which neighborhood the property is located. This Like Properties analysis is much more diffi cult to compile but adds signifi cantly more insight into the micro markets existing in these elite Seven Hills neighborhoods. In order to compare Like Properties, each of the following Location Attributes were evaluated and ranked on a scale of 1 to 5 (5 being the highest) for every custom home and home-site in Seven Hills:

• Interior• Mountain View• Golf View• Valley View• Strip View

Because each of the above attributes has had a materially different historical impact on the value of the property, a mathematical formula must be applied to the raw attribute scores to determine the weighted average total rating. For example, market demand for a property with a Mountain View rating of 5 has not been nearly as strong as a property with a Strip View rating of 5. Finally, the properties are placed into one of three groups based upon their total weighted average rating. Group one consists of Like Properties with the lowest total weighted average rating and on the opposite end of the spectrum, group three consists of Like Properties with the highest weighted average rating, in the fi nest locations, regardless of neighborhood.

KPrime Realty, Ltd 11201 S. Eastern Ave, Suite 100 702.682.6529 Beth Naef Owner / Broker [email protected] www.PrimeRealtyNV.com

Although this sophisticated analysis helps evaluate past and future trends in the various micro markets, it does not necessarily support the price of any one specifi c home or home-site. The latter requires a thorough understanding of the features of the specifi c home, lot and the ever-changing market conditions. Likewise, just because the Like Properties analysis was not compiled for the executive neighborhoods, it does not mean that such micro markets do not exist there. As a case in point, there is currently a 74% list price spread between the least expensive and most expensive home in the Renaissance neighborhood. This seemingly wide gap helps underscore the impact that the above stated Location Attributes can have on what are otherwise similar properties. The point is know the product and know the market.

THE DATA

For each of the three Property Types (Custom Homes, Custom Home-sites and Executive Homes) the following Tables are included:

1. Overall Analysis2. Like Property Analysis Excluding Executive Homes (custom home and home-site Property Types)3. Neighborhood by Neighborhood Analysis

And, each of the Tables, includes the three following Table Subsections:

1. Closed Properties Analysis2. Currently Available Properties3. Price Adjusted-Currently Available Properties Analysis

The fi rst Table Subsection (Closed Properties) includes the benchmark data that all the other information is measured against. This data, collected from properties that have closed in the current quarter (quarter ended 9/30/04) is highlighted in orange and is initially compared to data derived from closings in the previous quarter (quarter ended 6/30/04) as well as data derived from closings in the same quarter, one-year ago (quarter ended 9/30/2003). The next Table Subsection is the Currently Available Properties section. Here, we compare the above stated benchmark data to data derived from all the unsold properties that were still available for purchase as of September 30, 2004. This forward looking analysis can be used as one more indicator of where prices may be heading and which types of properties buyers may be most interested in purchasing.

Because most sellers and buyers negotiate the ultimate purchase price to be something less than the sellers full asking price and since THE SEVEN HILLS REPORT® tracks this data (Average % of Asking Price) we included the fi nal Table Subsection (Price Adjusted – Currently Available) section. Here we can attempt to further refi ne our analysis of future pricing trends by adjusting the asking prices by the “normal” reduction in asking prices that buyers and sellers have most recently negotiated. This is easily accomplished by multiplying the current asking prices by the Average % of Asking Price factor achieved in the current quarter. Assuming future market forces remain constant and future buyers and sellers negotiate close to the same price discounts we have experienced in the current quarter then we have one more key economic indicator of what the future may hold.

QUARTER ENDED SEPTEMBER 30, 2004 HIGHLIGHTS

Custom Homes

Overall, Median Sales Prices Per Square-Foot, appear to be escalating rapidly (up 10% in just one quarter). However, by analyzing the micro market data, we fi nd that this increase is due to the type of homes sold in the current and previous quarter rather than to a per square-foot sales price increase. Specifi cally, in the prior quarter (quarter ended 6/30/2004) there were a total of ten homes sold, nine of which were in the Rating-1 micro market class. Therefore, the previous quarter’s overall median sales price of $242 per square-foot is drastically infl uenced by homes in this rating class which are historically less than homes in the higher rating classes (rating class-2 and rating class-3). Conversely, there were only six homes sold during the current quarter (quarter ended 9/30/04), with exactly two homes coming from each of the three rating classes. Unlike the previous quarter, the current quarter’s overall median price per square-foot is a uniform refl ection of the median prices of all three rating classes and is not disproportionately weighted by the median price of homes comprising the rating-1 class of properties. In fact, the overall median price per square-foot in the current quarter is almost exactly equal to the median price per square-foot of homes in the rating-2 class ($266). In conclusion, sometimes we must look deeper than the overall custom home table in order to more accurately evaluate potential price trends.

Notwithstanding the above paragraph, there does appear to be signs that prices may be ready to escalate over the next two to three quarters. If we switch our focus from recent closings to what is currently available for sale and adjust those asking prices by the historical discount sellers have settled for in order to close their properties, we see an interesting pricing trend. Specifi cally, the Available Properties - Price Adjusted section of all three rating class tables, suggest that prices may rise 23%, 16% and 23% for properties in rating class 1, 2 and 3 respectively. The question is, will prices actually increase or will the market force sellers to signifi cantly reduce their asking prices, as measured by the Average % of Asking Price factors, beyond the historical 88%, 88% and 84% we have historically witnessed for properties in rating class 1,2 and 3 respectively. We will be monitoring this exciting development closely in order to best represent our clients.

Custom Home-sites

Overall, custom home-site activity decreased 25% between the previous and current quarter. This decrease is most notable in rating classes 1 and 3. However, rating class-2 experienced a signifi cant 57% increase in activity over the prior quarter. Across the board, we are looking at less than one years supply of inventory, which should continue to fuel potential price increases. Median Sales Price Per Square-Foot is down 7% overall, but once again, this is a function of the type of lots sold between the current and previous quarter (quarter ended 9/30/2004 vs. quarter ended 6/30/2004) rather than a function of falling prices. In fact, the pricing trend for custom home-sites appears to be signifi cantly more conclusive than the data supporting a potential upward pricing trend for custom homes. Both Average Days on-the-market and Average % of Asking Price indicators suggest a healthy demand for properly priced custom home-sites. Median Sales Price Per Square-Foot is up 23% and 10% for properties with a class rating of 2 and 3 respectively. Once again we need to exercise caution when we are only looking at one quarter’s worth of activity. The next two quarterly editions of THE SEVEN HILLS REPORT® should include enough sales activity to help identify and validate trends we may be seeing in this fi rst quarter.

Executive Homes

Overall, executive home real estate activity is down 42% from the previous quarter’s total sales of 17 homes and down 133% from a year ago when sales in the quarter ended September 30, 2003 totaled an impressive 28 homes. Conversely, median sales price per foot has increased 7% in just one quarter and has increased an amazing 35% since September 30, 2003.

This segment of the market enjoyed unparallel price appreciation over the last 12 months primarily due to the scarcity of land in the Las Vegas valley and unbridled investor speculation that pushed prices up week after week. Most of the national homebuilders that I stay in contact with believe that we are currently in a “cooling off” period. The majority of the investors have stopped buying and are now selling their Las Vegas valley properties. Some merchant builders have reduced their home prices as much as 25% in order to compete with the large amount of investor inventory recently put on the market. The current thinking of most national builders is that sellers will need to be more patient over the next two to three quarters until the above stated excess supply of investor related resales are absorbed.

Prime Realty, Ltd 11201 S. Eastern Ave, Suite 100 702.682.6529 Beth Naef Owner / Broker [email protected] www.PrimeRealtyNV.com

Custom HomeTables

…it’s about lifestyle


Qtr. Ended 9/30/04 10,669 1,625,000 6,764 6 268 173 86% 27

Qtr. Ended 6/30/04 13,011 1,287,500 5,343 10 242 115 91% 25

Percentage Change -22% 21% 21% -67% 10% 34% -6% 7%

Qtr. Ended 9/30/03 14,734 1,200,000 5,325 11 227 126 90% N/A

Percentage Change -38% 26% 21% -83% 15% 28% -5% N/A

Currently Available 2,500,000 7,032 354 14

Percentage Difference 35% 4% 24%

Currently Available 2,151,355 305

Percentage Difference 25% 12%

Qtr. Ended 9/30/04 2,819 1,409,500 6,095 2 235 134 88% 14

Qtr. Ended 6/30/04 11,361 1,200,000 5,268 9 237 92 92% N/A

Percentage Change -303% 15% 14% -350% -1% 31% -4% N/A

Qtr. Ended 9/30/03 10,234 1,137,059 5,007 9 227 79 93% N/A



Percentage Difference 22% -1% 32%



Custom Homes - Overall TableClosed Properties:

Dollar Number Median Sales Average % Volume Median Average of Price Per Average Days of Current (000) Sales Price Square-Feet Sales Square-Foot on-the-market Asking Price Inventory

Currently Available Properties: Median Asking Median Average Price Per Inventory Asking Price Square-Feet Square-Foot (In Months)

Price Adjusted - Currently Available Properties: Adjusted Median Adjusted Median Asking Price Asking Price Per Square-Foot

Custom Homes - RATING OF 1 TABLEClosed Properties:





Qtr. Ended 9/30/04 3,250 1,625,000 6,156 2 266 117 88% 6

Qtr. Ended 6/30/04 1,650 1,650,000 6,011 1 275 318 87% N/A

Percentage Change 49% -2% 2% 50% -3% -173% 1% N/A

Qtr. Ended 9/30/03 1,300 1,300,000 4,612 1 282 292 88% N/A

Percentage Change 60% 20% 25% 50% -6% -151% 0% N/A





Qtr. Ended 9/30/04 4,600 2,300,000 8,042 2 286 270 84% 7

Qtr. Ended 6/30/04 N/A N/A N/A 0 N/A N/A N/A N/A

Percentage Change N/A N/A N/A - N/A N/A N/A N/A

Qtr. Ended 9/30/03 3,200 3,200,000 8,900 1 360 375 85% N/A

Percentage Change 30% -39% -11% 50% -26% -39% -2% N/A














Qtr. Ended 9/30/04 1,600 1,600,000 6,687 1 239 120 84% 3

Qtr. Ended 6/30/04 3,908 974,000 3,847 4 255 184 97% N/A

Percentage Change -144% 39% 43% -300% -7% -53% -15% N/A

Qtr. Ended 9/30/03 465 1,200,000 4,650 4 249 172 87% N/A

Percentage Change 71% 25% 31% -300% -4% -43% -4% N/A




Percentage Difference -3% 19%

Qtr. Ended 9/30/04 0 N/A N/A 0 N/A N/A N/A 4

Qtr. Ended 6/30/04 2,700 1,350,000 5,428 2 247 9 94% N/A

Percentage Change N/A N/A N/A N/A N/A N/A N/A N/A

Qtr. Ended 9/30/03 4,200 2,100,000 6,710 2 290 188 85% N/A


Currently Available 2,109,250 6,392 348 N/A

Percentage Difference N/A N/A N/A

Currently Available N/A N/A

Percentage Difference N/A N/A

venezia custom homes - neighborhood tableClosed Properties:




rapallo custom homes - neighborhood tableClosed Properties:





Qtr. Ended 9/30/04 6,969 1,600,000 6,613 4 272 165 85% 19

Qtr. Ended 6/30/04 7,373 1,548,000 6,140 5 237 115 88% N/A


Qtr. Ended 9/30/03 5,154 1,170,000 5,493 4 228 41 97% N/A

Percentage Change 26% 27% 17% 0% 16% 75% -14% N/A





Qtr. Ended 9/30/04 0 N/A N/A 0 N/A N/A N/A 1

Qtr. Ended 6/30/04 0 N/A N/A 0 N/A N/A N/A N/A




Currently Available 2,790,000 7,468 374 N/A




terracina custom homes - neighborhood tableClosed Properties:


portofi no custom homes - neighborhood tableClosed Properties:







Qtr. Ended 9/30/04 2,100 2,100,000 7,446 1 282 261 91% 0





Currently Available N/A N/A N/A N/A




villa cortina custom homes - neighborhood tableClosed Properties:




Custom Home-SiteTables

…it’s about location


Qtr. Ended 9/30/04 6,482 542,500 20,546 12 26 114 97% 25

Qtr. Ended 6/30/04 6,115 390,000 18,528 15 27 276 97% N/A

Percentage Change 6% 28% 10% -25% -7% -143% 1% N/A

Qtr. Ended 9/30/03 250 250,000 14,375 1 17 53 96% N/A

Percentage Change 96% 54% 30% 92% 32% 53% 1% N/A

Currently Available 599,000 24,777 34 6


Currently Available 581,374 33


Qtr. Ended 9/30/04 1,290 445,000 20,183 3 22 93 96% 6

Qtr. Ended 6/30/04 3,280 375,000 18,247 9 22 230 97% N/A

Percentage Change -154% 16% 10% -200% -1% -146% -1% N/A







custom home-sites - overall tableClosed Properties:




custom home-sites - rating of 1 tableClosed Properties:





Qtr. Ended 9/30/04 3,904 560,000 20,349 7 27 60 98% 11

Qtr. Ended 6/30/04 1,365 430,000 19,312 3 21 229 98% N/A

Percentage Change 65% 23% 5% 57% 23% -281% 0% N/A

Qtr. Ended 9/30/03 250 250,000 14,375 1 17 53 96% N/A






Qtr. Ended 9/30/04 1,288 643,750 21,780 2 30 332 96% 8

Qtr. Ended 6/30/04 1,470 510,000 18,586 3 27 462 95% N/A

Percentage Change -14% 21% 15% -50% 10% -39% 1% N/A
















Qtr. Ended 9/30/04 3,767 520,000 22,695 7 24 83 97% 14

Qtr. Ended 6/30/04 2,305 390,000 23,218 6 20 321 94% N/A

Percentage Change 39% 25% -2% 14% 17% -287% 4% N/A

Qtr. Ended 9/30/03 250 250,000 14,375 1 18 53 96% N/A






Qtr. Ended 9/30/04 400 400,000 16,988 1 24 205 89% 3

Qtr. Ended 6/30/04 390 390,000 17,860 1 22 118 99% N/A

Percentage Change 3% 3% -5% 0% 7% 42% -11% N/A







terracina custom home-sites - neighborhood tableClosed Properties:




rapallo custom home-sites - neighborhood tableClosed Properties:





Qtr. Ended 9/30/04 1,770 560,000 17,555 3 31 19 98% 6

Qtr. Ended 6/30/04 915 457,500 15,464 2 29 46 96% N/A

Percentage Change 48% 18% 12% 33% 4% -142% 1% N/A






Percentage Difference -0% 4%

No Activity

venezia custom home-sites - neighborhood tableClosed Properties:




portofi no/villa cortina home-sitesClosed Properties:


Executive HomeTables

…it’s about you


Qtr. Ended 9/30/04 8,695 625,000 3,386 12 216 29 99% 44

Qtr. Ended 6/30/04 11,438 615,000 3,342 17 201 33 100% N/A

Percentage Change -32% 2% 1% -42% 7% -14% -2% N/A

Qtr. Ended 9/30/03 13,666 497,000 3,517 28 141 57 97% N/A

Percentage Change -57% 21% -4% -133% 35% -97% 2% N/A





Qtr. Ended 9/30/04 2,535 810,000 4,509 3 180 28 100% 16

Qtr. Ended 6/30/04 3,374 862,000 4,277 4 198 34 100% N/A

Percentage Change -33% -6% 5% -33% -10% -21% 0% N/A

Qtr. Ended 9/30/03 5,883 555,000 3,613 11 145 62 97% N/A






executive homes - overall tableClosed Properties:




renaissance - neighborhood tableClosed Properties:





Qtr. Ended 9/30/04 2,025 1,037,500 3,877 2 263 8 98% 6

Qtr. Ended 6/30/04 2,100 680,000 3,419 3 188 14 101% N/A

Percentage Change -4% 35% 12% -50% 29% -75% -3% N/A

Qtr. Ended 9/30/03 2,137 524,000 3,753 4 142 69 93% N/A



Percentage Difference -14% -10% 2%


Percentage Difference -17% -1%

Qtr. Ended 9/30/04 2,430 605,000 2,809 4 218 34 98% 9

Qtr. Ended 6/30/04 1,227 613,500 3,272 2 190 7 103% N/A

Percentage Change 50% -1% -17% 50% 13% 79% -5% N/A

Qtr. Ended 9/30/03 1,568 529,000 3,858 3 136 104 97% N/A

Percentage Change 36% 13% -37% 25% 38% -206% 1% N/A


Percentage Difference 14% 24% -14%


Percentage Difference 12% -17%

presidio - overall tableClosed Properties:




villagio - neighborhood tableClosed Properties:




Qtr. Ended 9/30/04 755 755,000 4,220 1 179 0 96% 3

Qtr. Ended 6/30/04 1,925 615,000 3,006 3 202 32 97% N/A

Percentage Change -155% 19% 29% -200% -13% N/A -1% N/A

Qtr. Ended 9/30/03 2,687 458,750 3,593 6 127 28 97% N/A

Percentage Change -256% 39% 15% -500% 29% N/A -1% N/A





Qtr. Ended 9/30/04 1,705 560,000 2,706 3 214 38 100% 9

Qtr. Ended 6/30/04 2,813 590,000 2,776 5 203 54 102% N/A

Percentage Change -65% -5% -3% -67% 5% -42% -2% N/A

Qtr. Ended 9/30/03 1,391 332,000 2,646 4 133 37 99% N/A

Percentage Change 18% 41% 2% -33% 38% 3% 1% N/A





palazzo monte - overall tableClosed Properties:




palantine hill - neighborhood tableClosed Properties:




User to independently validate all data.The Seven Hills Report is not meant to be a solicitation if your property is currently listed with another real estate agent.

11201 S. Eastern Ave, Suite 100 H e n d e r s o n , N e v a d a 8 9 0 5 2

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Seven Hills Annual Report