1. Housing Seminar Executive Modesto May 24, 2006 Steve Smiley – Principal ssmiley@hanleywood.com 925-737-1110 x224 Hanley Wood Market Intelligence www.hanleywood.com www.builderinfostore.com

2.  Information: Nation’s leading provider of residential real estate information – Covering 55 of top 75 housing markets nationwide (51% of all permit activity) – Addressing active subdivisions and the entitlement pipeline  Consulting: Customized analysis for residential, mixed-use and master-planned communities – 840 studies in 20 states including Canada & Mexico in 2005 – Pricing strategies, absorption studies, product analysis and strategic planning – Continued expansion in top housing markets. www.hanleywood.com www.builderinfostore.com JUST WHO IS HANLEY WOOD MARKET INTELLIGENCE?

3.  An NAR survey recently showed that one quarter of the homes bought in 2004 and 2005 were purchased for investment. Greenspan and Seiders believe it’s closer to 10 percent. Central Valley may have been closer to 25-30% in some markets (maybe higher in places like Merced, Lathrop, Patterson?).  The slowdown in new home sales in the fourth quarter of 2005 and first quarter of 2006 was most likely due to investor pull back and peak home prices (along with increasing interest rates). Buyers seem to be waiting on the sidelines.  “The housing market is losing touch with reality” says Fortune magazine in a cover article exdplaining why the bubble is going to pop. “Prices have continued to soar and the gap between home values and the underlying fundamentals such as personal income and job growth is greater than ever”.  In reality, job growth and personal income are on the rise. In addition, real estate equity is balancing out the difference between home prices and personal income.  Pricing incentives on the rise for standing inventory, as public and private builders try to keep inventory levels manageable. $30,000-$50,000 not unusual for homes ready for move-in. Look for sales incentives to stablize as we go through the May and June. In some markets, cancellations have slowed Recent Quotes & Trends……….

4. Source: Hanley Wood Market Intelligence Market Monitor EMPLOYMENT GROWTH Modesto, Fresno & Madera 2005 – Employment Growth Fresno – 5,800 Modesto – 4,600 Madera – Flat www.hanleywood.com www.builderinfostore.com

5. Source: Hanley Wood Market Intelligence 2005: 11,000 EAST BAY JOB GROWTH:

6. Source: Economy.com, December 2005 CV IN-MIGRATION FLOWS: 2005 www.hanleywood.com www.builderinfostore.com

7. Source: Bureau of the Census PERMIT HISTORY Merced, San Joaquin, Stanislaus, Fresno & Madera Counties www.hanleywood.com www.builderinfostore.com

8. NEW HOME AFFORDABILITY RATIO Central California Note: Data is for 30-Year Fixed Rate Mortgage Source: Hanley Wood Market Intelligence Market Monitor Note: Data is for 30-Year Fixed Rate Mortgage Source: Hanley Wood Market Intelligence Market Monitor 1st Quarter 2006 Statistics Central California 13.5% www.hanleywood.com www.builderinfostore.com

9. MEDIAN DETACHED PRICE TRENDS Stanislaus is a Moderate Bargain Source: Hanley Wood Market Intelligence Market Monitor www.hanleywood.com www.builderinfostore.com

10. 1st Qtr 2006 Statistics Fresno$324,233 Madera$326,374 Merced$393,040 Stanislaus$558,283 San Joaquin$445,240 1st Qtr 2006 Statistics Fresno$324,233 Madera$326,374 Merced$393,040 Stanislaus$558,283 San Joaquin$445,240 Source: Hanley Wood Market Intelligence Market Monitor SFD MEDIAN PRICE: NOTHING BELOW $324K Merced, San Joaquin, Stanislaus, Fresno & Madera Counties www.hanleywood.com www.builderinfostore.com

11. NEW HOME MARKET Merced, San Joaquin, Stanislaus, Fresno & Madera Counties Note: 2006* is annualized through March. Source: Hanley Wood Market Intelligence Market Monitor Note: 2006* is annualized through March. Source: Hanley Wood Market Intelligence Market Monitor Stanislaus Captured 19% of 2005 Sales And 18% of 2006* Sales www.hanleywood.com www.builderinfostore.com

12. Source: Hanley Wood Market Intelligence Market Monitor Total Sales - 1Q06 Merced – 348 San Joaquin – 918 Stanislaus – 487 Fresno – 1,446 Madera – 225 NEW HOME SALES Merced, San Joaquin, Stanislaus, Fresno & Madera Counties www.hanleywood.com www.builderinfostore.com

13. AVG SALES RATES Source: Hanley Wood Market Intelligence Market Monitor 1Q06 Sales Rates Attached 0.50 Detached2.56 www.hanleywood.com www.builderinfostore.com

14. Source: Hanley Wood Market Intelligence Web Report 1 st Qtr 2006 48% between $300K-$500K NET SALES: MAJORITY NOW BETWEEN $300K-$500K Merced, San Joaquin, Stanislaus, Fresno & Madera Counties www.hanleywood.com www.builderinfostore.com

15. Observations for 2006  1) Watch resale market inventory/price.  2) Limit/control investor units.  3) Control inventory/incentives.  4) Look for land values to stablize or come down.  5) Increasing employment growth along with higher interest rates.  6) New homes sales down from 2005, still solid in 2006.  7) Increasing growth management.