February 21, 2005

We have started off 2005 where we left off in 2004, up strong. Condos and townhomes closed 482 units or
an increase of 23.3% over the same year ago period. Detached single family closed 3,065 units or an
increase of 6.3%.

Total single family closings for January were up 8.3% and after lagged results are included we should have a
double digit increase to start the year off. Condos and townhomes achieved their 20th consecutive double -
digit increase.

Traditionally, the average sale price in January is lower than December’s average and even the prior year’s
average. I believe this is due from homes selling that “have” to sell, i.e. transferees, foreclosures, and
consumers who have already purchased or are building another home. Many home owners pull their homes
off the market over the holidays and then wait closer to spring to re-list their homes. This will leave the
more motivated sellers and usually lower prices on the market.

January 2005 followed tradition, as the average sale price for condos and townhomes was $182,099
compared to December’s $189,496 and 2004’s $186,188. The average price for single family detached in
January was $234,876, while the average price for December was $238,369 and 2004 was $240,312.
In January the average price usually drops, but the days-on-market goes up. In January, when the inventory
levels are usually at the low point for the year, there is a better chance for some of the stagnant inventory or
homes that have been on the market longer to be purchased, which results in increased DOM.

The DOM for condos and townhomes was 95.3 in January, while it was 90.8 in December. Similarly, the
DOM for single family detached was 84.0 in January, while only 81.3 in December.

The DOM trend has been “up” for the past 5 periods or months. Inventory levels over this same period have
also flattened, so the increases are more from stagnant inventory selling off rather than a slowing housing
market.

Probably the most informative reports attached are the Absorption Reports. We tend to report DOM for the
total market, but there are distinctly different trends for the different price-points. A home in the higher
price-points tends to take longer to sell than in the lower price-points.

Reviewing the Absorption Report for single family detached – resale, the highest months of inventory under
$500,000 is 6.7. However, from $500-$749M it is 8.2, $750-$999M 14.1, $1MM-$2MM 25.2, and for
$2,000,000 and up it is 37.9 or over three years of inventory for that price-point.

Thank you,

Steve Palm
Smart Numbers

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