These comments are made in relation to the Market Condition Graphs for July 2009.

·         SUPPLY (LISTED): Supply continues to diminish dropping about 200 per month. This is consistent with a tendency that favors price stabilization.

·         DEMAND (CLOSED PER MONTH): Up about 50 units from June. This is also a continuation of a strengthening of the market from the perspective of the seller.

·         FAILURES: Failure frequency declined about 60 units from June.

·         SALE PENDING (FUTURE CLOSINGS): Beginning to level off. This is an early indicator of market slowing. However, it may be short term.

·         PERCENT SELLING: The consequence of increasing demand and declining failures is an increase in Percent Selling.  Percent Selling increased to 72% from June’s 67%.

·         MONTHS SUPPLY: Continues to tighten (2.4 to 2.1 months) due to decline in supply and increase in demand.  The magnitude and persistence of these changes implies the underlying supply/demand realities are being meaningfully affected.

·         MARKET SPEED: Significant jump in Market Speed (96) signals very strong demand. As is usual, the surge in speed favors relatively lower priced properties and REO (See Market Activity Table).

PRICES: List price holding at $135K. Pending price of properties in escrow is greater than current closing price.  These price indicators are signaling proximity to or approaching market bottom. June median closing outcome was $105K and holding. See that median price (May) has recovered to $105 after threatening to break the $100K benchmark.  Because pending price is greater than closing price, it appears that the market has stabilized in the short term at current prices. This statement is true on average; however, prices on the upper end of the market can be expected to continue to display weakness due to unfavorable demand/supply conditions.

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