March 22, 2005

There were 4,318 closings for total single family in February. This is 4.9% above the same year ago period
and after lags are reported we should be close to another double digit increase.

There were 537 closings for condos and townhomes and this was a double-digit increase of 10% over the
same year ago period. This is also the 21st consecutive double-digit increase for condos and townhomes.
Last year, 2004, we had an increase of 32.2% over 2003. In order to keep the consecutive streak alive the
attached market will have to remain very strong.

The number of closings for single family detached was 3,781 in February or an increase of 4.2% over last
year. We should also be close to a double-digit increase for single family detached after lags are reported.
The average price for single family detached was $240,671 in February or an increase of 7.7% over February
2004. How significant is this increase? This is the largest increase since January 2001. If this was the norm
across the nation we should expect pressure on interest rates to rise as the Fed reacts to the rising prices.
The average price for condos and townhomes was actually down 0.5% in February from the same year ago
period. This was the 9th decrease in the last 14 months. The average price for condos and townhomes is
overall lower for condos and townhomes, because of all the lower priced new construction for these types of
homes during the past few years. Almost one out of five homes built today is either a condo or a townhome,
compared to seven years ago when it was one out of thirty.

For the second consecutive quarter the number of expired listings declined from the same year ago period.
There were 3,404 expired listings for all single family compared to 3,477 a year ago. The last time we had
back to back decreases was in 1999.

The reason that expired listings have decreased or flattened is because inventories have moderated greatly.
This also is reflected in the higher prices mentioned above. This is your basic supply and demand. If you
have a consumer contemplating selling their home, right now is one of the most favorable markets we have
experienced.

We have a favorable market to sell a home right now, but I believe interest rates are heading up. Gas prices
keep increasing and this will affect all pricing on goods and services and eventually translate into price
increases across the board. Rates have already edged up on the 30 year mortgage about four tenths of a point
since the first of the year.

We are currently around 5.5% on the 30-year mortgage. Our models indicate that we are okay up to 6.1%,
but if we should go over 6.7-6.8% watch out, as the markets will be negatively affected by those increases.

Thank you,

Steve Palm
Smart Numbers

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