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Land prices / insane!!!

I’m not saying what will happen to market BUT…. To add to mid 80’s analogy which we mirror….. DEBT is also increasing. Almost at same place as 80’s. So- we have same/similar: debt, high commodity prices, high inflation, rising interest rates & sky rocketing input costs. It’s actually spooky how similar it is. “Low Debt” was the one difference folks usually claim but actually not totally right. SEE BELOW.
Not predicting anything but folks should think through this. I knew a lot of farmers who didn’t make it from the 2017-2019 market when ag prices softened a lot…. Smart & hard working folks held on like always but newer farmers or any sloppy farmer felt it big time: bankrupt or new career (typical for cycles in markets). This was…
Without high inputs & with low interest & lower land prices.

This scenario today could have some major changes coming. Maybe, maybe not.
Read this LINK. Smart & hard working usually make it during tough times BUT- those that don’t understand history are bound to repeat it.

USDA ERS - Assets, Debt, and Wealth

The farm business balance sheet reports estimates of the current market value of farm business sector assets, debt, and equity as of December 31 of a given year. It is called a "balance sheet" because of the accounting relationship: assets – debt = farm equity. Farmers and ranchers...
www.ers.usda.gov www.ers.usda.gov

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Sligh1 said:
Dow under 30k! The same time rates just got hiked another .75%.
Interesting times!!! The months ahead could bring some more attractive buys for folks!!!
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History has a way of repeating itself….


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8.6% inflation rate as of late May, hasn’t been that high since 1981! Powell saying the Feds will do anything to slow it down. I wasn’t around for the 80’s and wasn’t old enough to understand 2008 but something has to give here. Sky high prices and rates to boot. We are coming off of the lowest mortgage rates we have ever seen (2.97% average), so I don’t know if we would see a lot of farms going under, like the 80’s. Lots of refinancing in the past two years. Unless Tom, Dick, and Hairy bought land since March first when the hikes started and are soon to lose their jobs in the coming months. Maybe I’m not thinking the right way though….. time will tell.


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JUNIOR said:
8.6% inflation rate as of late May, hasn’t been that high since 1981! Powell saying the Feds will do anything to slow it down. I wasn’t around for the 80’s and wasn’t old enough to understand 2008 but something has to give here. Sky high prices and rates to boot. We are coming off of the lowest mortgage rates we have ever seen (2.97% average), so I don’t know if we would see a lot of farms going under, like the 80’s. Lots of refinancing in the past two years. Unless Tom, Dick, and Hairy bought land since March first when the hikes started and are soon to lose their jobs in the coming months. Maybe I’m not thinking the right way though….. time will tell.


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Inflation numbers are year over year, not month to month. So, expect to see high numbers for dang near 12 straight months. Monetary policy, such as rates hikes, are about 9 months behind in seeing an impact. That's often why recessions follow inflation/rate hike cycles

The first buyers to be hurting were thise looking to flip properties or those who bought on ARMs. The remaining buyers certainly bought too high, but if nothing else changes they will weather the storm. Have to laugh at those who invested speculated in products like acretrader at this recent peak in land values.
 
Wow, just researched acretrader, 5-10k per 1/10 of an acre? Seriously? Plus management fees and potential other fees... Sounds like a great deal, if you're running the company and can get enough business...
 
deerdown said:
Wow, just researched acretrader, 5-10k per 1/10 of an acre? Seriously? Plus management fees and potential other fees... Sounds like a great deal, if you're running the company and can get enough business...
Click to expand...
I’m going to read up on this. I skimmed over basics. I’m going to make a wild but educated guess that folks are paying way too high of prices & the company is the main money maker. My gut tells me most new customers are going to have a bumpy road ahead if they give this place their $. If it’s $5-10k per 1/10th acre- some folks will likely get killed doing those deals!!! Gonna dig in a little more.
Heck, with no extra overhead or company & employees to support- $20k an acre for ag land has me a bit nervous as it is. Add a company wanting their cut & overhead…. I’d be very cautious.

Land in general- if inflation continues to run away- its still probably the best route to go vs most other things. Especially long term. But to not see some major parallels to the 80’s or to completely ignore them could cause some major problems for some folks in the coming few years here. No one knows how this ends. But, it’s hard to argue that the world isn’t upside down crazy right now!!!
 
Sligh1 said:
I’m going to read up on this. I skimmed over basics. I’m going to make a wild but educated guess that folks are paying way too high of prices & the company is the main money maker. My gut tells me most new customers are going to have a bumpy road ahead if they give this place their $. If it’s $5-10k per 1/10th acre- some folks will likely get killed doing those deals!!! Gonna dig in a little more.
Heck, with no extra overhead or company & employees to support- $20k an acre for ag land has me a bit nervous as it is. Add a company wanting their cut & overhead…. I’d be very cautious.

Land in general- if inflation continues to run away- its still probably the best route to go vs most other things. Especially long term. But to not see some major parallels to the 80’s or to completely ignore them could cause some major problems for some folks in the coming few years here. No one knows how this ends. But, it’s hard to argue that the world isn’t upside down crazy right now!!!
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www.scamrisk.com

AcreTrader Review: Best Investment Platform? | ScamRisk

Check out our AcreTrader review, focusing on this farmland-focused crowdfunded real estate investing platform.
www.scamrisk.com www.scamrisk.com
This is one review I read on it...
 
deerdown said:
www.scamrisk.com

AcreTrader Review: Best Investment Platform? | ScamRisk

Check out our AcreTrader review, focusing on this farmland-focused crowdfunded real estate investing platform.
www.scamrisk.com www.scamrisk.com
This is one review I read on it...
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Good review. 99% of folks will likely have better results & an easier + better understanding of the investment buying it themselves. & this won’t hit guys like me who buy land for reasons way beyond $ & speculation.
For the 1% of others that want to throw some $ into land in a different manner & can “roll the dice” - this may be a good option. No way I’d do it but a very interesting concept In this “hot farm market” im not surprised to see come about. Young hungry guys, new business & a wild future so wish all the best.
 
  • Deleted by Ishi
Show…
One thing I’ve noticed lately doing my “weekly glance at land for sale”…. There’s a huge flush of land that’s so overpriced it’s bananas. Im sure it’s a variety of reasons….
1) folks who are like “people are paying crazy prices, I’ll just throw it out there & see if anyone is crazy enough to do it”.
2) people who realize the high mark of prices may have been 6 months ago. Realizing “uh oh, I missed the window of insanity- need to list it before rates go higher & recession deepens”
3) folks really believing their “mediocre land” with a tiny ROI mirrors or reflects the high end ag sale auctions they heard about.

We hear people analyze stocks & give OPINIONS like “it’s under or over valued, etc etc”. I’m gonna say it…. Pasture ground, rough ground, stuff with 1% ROI, etc etc …. OVERVALUED IMHO. Lemme put it this way…. U go buy 200 acres in a rural location with rough quality tillable/pasture for a $1-2m…. Very little income. Put a mortgage on it with payments …. We are witnessing a disaster in the making in THOSE CASES IMHO. Maybe I’m wrong. I just got done reading a 320 listing with maybe $10k income, junk soils, looked mediocre for deer hunting at best…. $6500/acre….. someone buys that even close to that and the market has trouble & they need to sell. OH MY GOSH!!! Still are some crazies out there I guess. a fraction of these buyers are gonna get hammered. That type of land is way way way overvalued imo. Again- I’m a land buying proponent - even now. But dang, there’s so many examples of insanely overpriced land I shake my head. Health of market is needing a correction or slow down badly. Thankfully, it’s starting.
 
Sligh1 said:
2) people who realize the high mark of prices may have been 6 months ago. Realizing “uh oh, I missed the window of insanity- need to list it before rates go higher & recession dee
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Everything you said...But this one stands out the most to me. I watch RE markets daily in 4-6 different locations throughout the country. Rec land and vacation homes were HOT 6-16 months ago. These areas are now the first to start seeing the pricing shift in the market. I'm seeing some vaca homes dropping 5-8% quickly because other houses in the neighborhood are going up for sale and they are trying to unload. On these, I see a 20% or more correction in the next 12 months.

Rec land going up now I see stalling out / stagnating because a lot of the guys who took $$ out of the stock market have already re-invested that $$ in RE / land.

With house rent prices going up, building costs leveling but still much higher than 2-3 years ago, home mortgages going up, people have to spend more $$ on their primary residence. That extra $200-500 / month eliminates any reality of investing in RE / land.

Grind it out over the next 6-8 months and try get hold cash for next year.
 
Sligh1 said:
One thing I’ve noticed lately doing my “weekly glance at land for sale”…. There’s a huge flush of land that’s so overpriced it’s bananas. Im sure it’s a variety of reasons….
1) folks who are like “people are paying crazy prices, I’ll just throw it out there & see if anyone is crazy enough to do it”.
2) people who realize the high mark of prices may have been 6 months ago. Realizing “uh oh, I missed the window of insanity- need to list it before rates go higher & recession deepens”
3) folks really believing their “mediocre land” with a tiny ROI mirrors or reflects the high end ag sale auctions they heard about.

We hear people analyze stocks & give OPINIONS like “it’s under or over valued, etc etc”. I’m gonna say it…. Pasture ground, rough ground, stuff with 1% ROI, etc etc …. OVERVALUED IMHO. Lemme put it this way…. U go buy 200 acres in a rural location with rough quality tillable/pasture for a $1-2m…. Very little income. Put a mortgage on it with payments …. We are witnessing a disaster in the making in THOSE CASES IMHO. Maybe I’m wrong. I just got done reading a 320 listing with maybe $10k income, junk soils, looked mediocre for deer hunting at best…. $6500/acre….. someone buys that even close to that and the market has trouble & they need to sell. OH MY GOSH!!! Still are some crazies out there I guess. a fraction of these buyers are gonna get hammered. That type of land is way way way overvalued imo. Again- I’m a land buying proponent - even now. But dang, there’s so many examples of insanely overpriced land I shake my head. Health of market is needing a correction or slow down badly. Thankfully, it’s starting.
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Agreed. The guys I see buying now are doing 1031 exchanges and need to put money somewhere. The inventory is so low, and they are overpaying.
 
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Sligh1 said:
One thing I’ve noticed lately doing my “weekly glance at land for sale”…. There’s a huge flush of land that’s so overpriced it’s bananas. Im sure it’s a variety of reasons….
1) folks who are like “people are paying crazy prices, I’ll just throw it out there & see if anyone is crazy enough to do it”.
2) people who realize the high mark of prices may have been 6 months ago. Realizing “uh oh, I missed the window of insanity- need to list it before rates go higher & recession deepens”
3) folks really believing their “mediocre land” with a tiny ROI mirrors or reflects the high end ag sale auctions they heard about.

We hear people analyze stocks & give OPINIONS like “it’s under or over valued, etc etc”. I’m gonna say it…. Pasture ground, rough ground, stuff with 1% ROI, etc etc …. OVERVALUED IMHO. Lemme put it this way…. U go buy 200 acres in a rural location with rough quality tillable/pasture for a $1-2m…. Very little income. Put a mortgage on it with payments …. We are witnessing a disaster in the making in THOSE CASES IMHO. Maybe I’m wrong. I just got done reading a 320 listing with maybe $10k income, junk soils, looked mediocre for deer hunting at best…. $6500/acre….. someone buys that even close to that and the market has trouble & they need to sell. OH MY GOSH!!! Still are some crazies out there I guess. a fraction of these buyers are gonna get hammered. That type of land is way way way overvalued imo. Again- I’m a land buying proponent - even now. But dang, there’s so many examples of insanely overpriced land I shake my head. Health of market is needing a correction or slow down badly. Thankfully, it’s starting.
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I agree, it's getting a little out of hand. I check listings regularly as well. I have a commercial property that I rent out and the tenet wants to buy it. I want to roll that into land but I can't find anything that tempts me.
 
47 acres of hilly hay ground, with an average CSR of 47, sold recently for $720k within 30 minutes of ia city. Couple small drainage ditches that are too wet for farming but no real hunting cover either. Rather crazy even in the corridor for something not zoned commercial.


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hillrunner said:
I agree, it's getting a little out of hand. I check listings regularly as well. I have a commercial property that I rent out and the tenet wants to buy it. I want to roll that into land but I can't find anything that tempts me.
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Why sell commercial?!??!!??? Wouldn’t the ROI on that be pretty good, even in a tough market? Like 5-10%+ ??? I don’t see a farm getting anywhere close to that. Curious what roi might be and why u would want to change that.
 
Sligh1 said:
Why sell commercial?!??!!??? Wouldn’t the ROI on that be pretty good, even in a tough market? Like 5-10%+ ??? I don’t see a farm getting anywhere close to that. Curious what roi might be and why u would want to change that.
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Yes, it's a solid investment. When I sold this business 5 years ago it was always assumed I would sell them the building once they got there feet under them.
I want to buy more land because I like land. I am not a buyer at what the market is currently offering though. If nothing changes on that front I'll likely have to roll those dollars into development or multi unit housing for the time being.
 
hillrunner said:
Yes, it's a solid investment. When I sold this business 5 years ago it was always assumed I would sell them the building once they got there feet under them.
I want to buy more land because I like land. I am not a buyer at what the market is currently offering though. If nothing changes on that front I'll likely have to roll those dollars into development or multi unit housing for the time being.
Click to expand...
I just bought a big industrial building with 15 acres since farms are so crazy. It wasn’t a lot of $ but it’s a solid 10% ROI type of deal. Farms I see are 1-3%.

IMO- these land prices are gonna come down. I mean- if a guy found a great combo farm for $4-6k depending on soil & really liked it and can afford it- go for it! $7-10k for mixed rec- insane to do it IMO.
I’d be holding off for a while otherwise. MARK MY WORDS…. 6-12 months from now - things will be far slower or softer. Maybe I’m wrong but I’ll say it & time will tell if right or wrong. Time is your friend if anyone is looking to buy.
 
Sligh1 said:
I just bought a big industrial building with 15 acres since farms are so crazy. It wasn’t a lot of $ but it’s a solid 10% ROI type of deal. Farms I see are 1-3%.

IMO- these land prices are gonna come down. I mean- if a guy found a great combo farm for $4-6k depending on soil & really liked it and can afford it- go for it! $7-10k for mixed rec- insane to do it IMO.
I’d be holding off for a while otherwise. MARK MY WORDS…. 6-12 months from now - things will be far slower or softer. Maybe I’m wrong but I’ll say it & time will tell if right or wrong. Time is your friend if anyone is looking to buy.
Click to expand...

I've got some realtor friends who will say that while it has "slowed down, it is still very strong". HOWEVER, they are dealing in single family homes. To ME, a strong market is when individual investors are putting their $$ into / back into it because they believe in the market. And, that is not happening right now because of the prices.
 
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