Mixed Signals

credit suisse

We just received the June 2014 Credit Suisse Agent Survey.  Once again the survey is showing mixed results.  In fact the results are not just mixed they are almost contradictory. 

First, many markets are seeing price increases, while at the same time buyer traffic is decreasing.  Now according to supply and demand as buyers decrease, prices should fall as well.  The question is, what the heck is going on?  Well, while the number of buyers is declining, the inventory also remains very low.   In addition, interest rates also remain low, which helps hold the prices up.  Agents further indicated that buyers are growing tired of looking at small inventories at high prices.

So what does this all mean?  The indications are that we are in a transition market.  Should inventory or interest rates rise, we will see a leveling off or decline in pricing.  Does this mean that values will drop?  Not necessarily.  We may see better asking prices with values holding at current levels.  Right now the Crystal Ball remains a bit foggy.  I suggest we all keep a close eye on the market this summer for more indicators of where the market is headed.

As always, if you have any questions or comments feel free to contact us.

Larry D. Smyth

President/Broker

Farrell Smyth, Inc.

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