MILWAUKEE RANKS #1 IN METRO MARKET

REAL ESTATE SALES TURN AROUND.

Release Date: April 3, 2009

Key Characteristics
• On a year-over-year basis, the decline in home sales slowed in January, indicating significant demand for
homes at “motivated” prices. Sales across the 25 MSAs tracked by Radar Logic declined 6% in the year
ending January 2009, versus 36% in the prior year. Eight of the MSAs saw transaction activity increase and
12 more saw transactions decrease less than a year earlier.
• Month-over-month declines in home sales from September 2008 through January 2009 reflect the historical
seasonal pattern. According to the National Association of Realtors, the historical pattern continued with an
increase in existing-home sales during February, the traditional start to the spring buying season.
• Motivated sales, which now account for over a third of all transactions in the 25 MSAs tracked by Radar Logic,
have started to exhibit the seasonal patterns that characterize housing markets on the whole.
• The growth of motivated sales as a share of total transactions contributed to a 23% year-over-year decline the
25-MSA RPX Composite from January 2008 to January 2009.
• Year-over-year price dynamics improved in Milwaukee, St. Louis and Sacramento. In Milwaukee, home prices
increased 1% from January 2008 to January 2009. In Sacramento, year-over-year price declines slowed from
27.8% between 2007 and 2008 to 27% between 2008 and 2009. In St. Louis, year-over-year declines slowed
from 7.6% in January 2008 to 6.5% in January 2009.
• Price fixings for RPX forwards imply that participants in the RPX market expect home prices to fall at least into
next year.

Discussion
On a year-over-year basis, the decline in home sales slowed in January, indicating significant demand for
homes at “motivated” prices. Total home sales across all 25 metropolitan statistical areas (MSAs) tracked by
Radar Logic declined 6% from January 2008 to January 2009, versus 36% from January 2007 to January
2008. Eight of the 25 MSAs displayed an increase in transaction counts compared to January 2008, and 12
more MSAs saw transaction counts decrease less in the year ending January 2009 than in the prior year.
The slowing annual rate of decline in transactions was due to large increases in motivated sales, which Radar
Logic defines as sales to third parties at foreclosure auctions and sales of foreclosed homes by financial
institutions and foreclosure service firms. While the rapid increase of motivated sales reflects the increase in
foreclosures over the last year, it also reflects significant demand for homes that are priced at “motivated”
discounts. Motivated sales in the 25 MSAs increased by over 100% in each of the two years leading up to
January 2009. From January 2007 to January 2008, motivated sales increased 119%, and from January 2008
to January 2009, motivated sales increased by another 106%, resulting in more than a fourfold increase in just
two years. All other sales decreased 44% between January 2007 and January 2008, and 28% between January
2008 and January 2009. The increase in motivated sales and decrease in other sales caused motivated sales to
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increase from 5% of total sales in January 2007 to 17% of total sales in January 2008 and 36% of total sales in January 2009.
Since 2000, the beginning of Radar Logic’s historical data, total transactions in the 25 MSAs have generally
fallen from September through January on a month-over-month basis and then started their spring rally in
February. Data from Radar Logic and the National Association of Realtors (NAR) show that, in most of the
country, the same seasonal pattern occurred in 2008 and 2009. According to Radar Logic data, sales in most
MSAs followed their historical seasonal pattern from September through January. Transactions across all 25
MSAs fell 17% in January, which was significantly larger than the 5% decline in the same period a year earlier,
but the price decline last January was smaller than average for that time of year and the decline this January
was within historical norms. According to existing home sales figures published by NAR, sales in most regions of
the U.S. increased this February in accordance with the historical pattern, but the western markets were a
notable exception. According to NAR, existing home sales in the West continued to decline through February, in
contrast to the historical pattern displayed by the western MSAs tracked by Radar Logic, which have displayed
transaction count increases in every February since the beginning of Radar Logic’s data history.

Over the last year, as motivated sales increased to over a third of all transactions in Radar Logic’s 25 MSAs,
they started to exhibit the seasonal patterns that characterize housing markets on the whole. From December
2007 - when motivated sales accounted for roughly one-eighth of all transactions - through March 2008,
motivated sales grew by no less than 16% a month. They showed no sign of the seasonal slowing displayed by
market-wide sales figures in most MSAs. In September 2008, when motivated sales had grown to a quarter of
all transactions, they started to replicate the seasonal trends displayed by other sales. As market-wide home
sales started to descend toward their winter lows, the month-over-month growth of motivated sales slowed to
3% from 11% in August. In the following months, motivated sales declined along with all other sales. However,
notwithstanding their month-over-month declines in recent months, motivated sales remain at very high levels
relative to previous years. Moreover, motivated sales continue to increase as a share of total sales because all
other sales are declining much more quickly. Since the beginning of the seasonal downturn in September,
motivated sales have decreased roughly 14% while other sales have declined 50%. In January 2009, motivated
sales decreased 6% from December, while other sales decreased 22%.

The growing share of motivated sales has put pressure on RPX prices. On average, the 25-MSA composite price
for motivated transactions was 36% lower than the composite price for other transactions between January
2008 and January 2009. Consequently, the rise of motivated sales from 17% to 36% of transactions during that
period played a significant role in the decrease of the 25-MSA composite price for all sales. The 25-MSA RPX
Composite fell by 23% from January 2008 to January 2009. Had the relative proportions of motivated sales and
other sales remained constant at January 2008 levels, the price decline in the Composite would have been closer
to 19%.

Year-over-year price dynamics improved in Milwaukee, St. Louis and Sacramento. In Milwaukee, where the
housing market has performed relatively well throughout the housing crisis, home prices increased 1% from
January 2008 to January 2009. This is in contrast to a 0.8% decline from January 2007 to January 2008. In
Sacramento, one of the worst performing MSAs during the housing crisis, year-over-year price declines slowed
from 27.8% between 2007 and 2008 to 27% between 2008 and 2009. Likewise, the year-over-year decline in
the RPX price for St. Louis slowed from 7.6% in January 2008 to 6.5% in January 2009.
Home prices declined on a year-over-year basis in 24 of the 25 MSAs tracked by Radar Logic. Phoenix saw the
largest year-over-year price declines in January. Home prices in Phoenix fell 36.9% from January 2008 to
January 2009 compared to 14.6% from January 2007 to January 2008.

Price fixings for RPX forwards imply that participants in the RPX market expect home prices to fall at least into
next year and then to rise again in 2011. Fixings imply that the 25-MSA RPX Composite will fall 21.7% from
January 30, 2009, to the end of the year and 26% from January 30, 2009, to the end of 2010. PDF FILE