Strand™ Index ratings for various segments of the residential condominium market

Dear Clients & Friends,

This next piece of research deals with the relative market strength, as measured by the Strand™ Index, of the condominium market in various geographic areas around Greater Seattle. The Strand™ Index is based upon the measurement of supply and demand forces in the housing market. The methodology is described on other pages in this web site. Essentially, high demand and low supply characteristics will produce a higher market strength index.

The table below lists the MLS geographic areas with the largest volumes of condominium sales over a six month period ending 7/6/99. The rows in the table are then sorted by sale volume, in descending order. The combined volume of single family and condominium unit sales over the past six months totals some 22,700 transactions. Of these sales, a little over 3,200 (14%) were condominiums. The median price for condos calculates to $139,500 while single family transactions logged a median of $186,000 — 33% higher.

Among the different geographic areas studied, there is surprising strength in MLS Area #130, the Burien-Normandy Park condominium market. Area 130 shows an average condominium sale price of $98,700, significantly lower than much of the rest of the market. One can always argue that lower prices will help generate higher demand. However, a study of the data from these charts shows that price is not the only factor in determining demand. MLS Area #390, Central Seattle/Madison Park, exhibits a higher demand factor than Area #130 and has an average price that is more than double the average of Area #130.

Demand in the marketplace is influenced by many things. It begins with buyers' desire and capacity to purchase available inventory. Demand is also influenced by characteristics such as access to employment, shopping entertainment, relative quality and condition of the housing inventory, among other items. It is the interaction of supply and demand that creates the market environment. The Strand™ Index measures market strength by quantifying the forces of supply and demand.

The Strand™ Index ratings for other segments of the housing market will be presented in future letters.

Regards,

Robert E. Rothstein