April 20, 2004

Our housing market is starting to show signs of an economy starting to heat up. March closings for all single
family were up 17.3% over the same year ago period, as 5,226 homes closed in March 2004 versus 4,455 for
March 2003. Condos and townhomes were up a very large 41.5% in what could be a record month after
lagged closings are reported. Detached single family closed 14.6% more in March 2004 than in March 2003
and after lagged closings are reported this mark could be over 20%.

The average sale price for single family detached was $236,640 for March. This is an increase of 7.5% over
the same year ago period and the largest year to year increase since January 2001. This is also the first time
since 1999 that the average sale price for a March was higher than the average price for the preceding year,
($231,600).

The average sale price for condos and townhomes was $185,556 or almost unchanged from the same year
ago period. However, if the single family detached prices keep increasing and a strong demand continues for
condos and townhomes, then their prices will start up strong again.

Condos and townhomes had much higher prices for expired, withdrawns, and solds were for 2003 versus 2004. This is very uncommon for the preceding year to be consistently higher across the board in pricing. Remember how much their
prices appreciated 1998-2003? The pricing moderated in 2004, which resulted in large percentage increases
for closings.
.
Days-on-market continues to improve, as DOM for all single family was 80.3 in March versus 82 for the
same year ago period. This marks the sixth consecutive month that DOM has dropped or stayed the same
compared to the same year ago period. If this trend continues, 2004 could have DOM drop from the previous
year for the first time since 1998-1999.

I expected March to be strong with better weather, an improving economy, and lower interest rates.
However, with our economy getting stronger the Fed may act quickly and raise interest rates to slow
potential inflation threats. The market has already prepared for this, as rates have ticked up 7/10’s of a point
in just the past three weeks.

I believe interest rates can move up another half a point without slowing down housing too much, but should
they go higher than that, housing would then be affected. The FED knows this too, and although inflation is
always a concern, a strong economy, especially in an election year, needs to exist.

Thank you,


Steve Palm
Smart Numbers