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Turning the corner in the real estate market?

Thinkin Rut said:
John...you are not thinking straight right now! List your ground first thing Monday morning. You wouldn't hold a stock on a high if you knew it was going down 40%. I'm sure you already sold your S&P at 4818! Pay your taxes, this is no joke. It's bad and only going to get worse. You know it and I know it. Sell all equities you have and convert to physical gold and silver. Good luck to you John, you are so blessed to have the knowledge to see through these murky waters!

If that doesn't convey the message I'm trying to send...You are entirely too negative, you are entirely too absolute, you are entirely too sure of yourself and your crystal ball is full of shit.
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If you bought a farm between $800 and $3500 an acre years ago and you own a farm outright or even at a 3.5/4 % fixed rate why would you sell it now? That makes no sense. So you can go into an 8% mortgage? First you would need a 1031 exchange or know your done with land all together and bite the bullet and pay the taxes. Nothing makes sense about buying a new farm right now. The only way I would be selling what I have is if I had too. Nothing about what your dating makes much sense. The fact remains that buying land right now is a bad idea. Its no different than buying at the top. If you bought NVDA at $80 you could of sold at $500 just after earnings. But you have lots of cushion between you and break even. The spy is no different. Would you be starting a position in the SPY right now? I surely wouldn’t. I know a few hedge fund managers. One of my good friends who runs one is sitting 80% in cash right now. He said he made a fortune off tech and sold at the top. He says no reason to be greedy. So he is about 20% in things that are safe and has 80% waiting on the correction to load back up. He has nothing to lose by waiting. I think he made an extremely smart move selling all his tech stocks near the top. Land is so much different. It’s a good place to hold/hide money. But definitely not buying at the top on a turning market. I’m not sure it gets much simpler than that. Unless your looking for a 1031, getting to old and ready to retire, have enough write offs to eat the tax implications or your going to lose your property there is no good reason to sell right now.


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Where’s the top?? Five years ago rec was selling at 3600/ac and folks in my neighborhood were saying it was too much. In May two properties that border me went for 5775/ac in a week. My neighbors are wishing for the 3600. Where’s the top? The top is a guess, hence the risk with any investment.
 
Windlooker said:
Not saying anyone is wrong here, but I’ve bought and sold several pieces of property beginning in 1990, and if I listened to the bank, politicians, my dad, my neighbor etc I’d own zero today. I’m currently under agreement to buy a house and 20 ac in this shit show and will do it. Don’t hold your breathe waiting for rec ground to decrease. A small correction maybe but 40% is wishful thinking. Won’t happen. Rates low prices are high, rates high prices lower, cash is king. With cash it doesn’t matter what the rigged system does, and there’s plenty of it out there.
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In the real life example I gave above the math would look like this. Buys at 250k 3 years ago. Several months ago can sell for 500k but doesn't. A 40% market correction comes and drops the value to 357k. The guy that didn't sell is still sitting at a 107k increase in 3 years. So in my mind a 40% correction seems very plausible. That increase seems too much too fast.
 
Here’s bizarre part of my thinking…. I THINK ground is gonna go down. I’d still buy a farm tomorrow. A “good buy”. With the understanding that it’s very possible it goes down 20%. Im ok with it. ESPECIALLY if it’s something im gonna have long term or get a rare shot at buying a farm I want. Heck- if it’s a farm “u had to have” & were able- I bet some would pay 20% over market right now even if they believed it would go down another 20% in next year.

As a SPECULATOR, INVESTOR OR WISE STEWARD OF $… the discussion is different (clearly not a case where u a farmer & ground bordering u comes for sale). Land in general…. If borrowing $….. I’d still buy. But I’d wait for “really good buys”. Or solid buys. I might wait 6-12 months too. I’d be in no hurry what so ever.

Where I think everyone on here agrees: waiting 6 months vs 6 years is where dudes get in trouble “I’ll wait for it to go down” …. Literally many YEARS go by, those dudes almost always lose or never buy land. I literally know guys who are “gonna buy land” going on >10 years now!!! Coulda bought when it was $2500. Won’t do it cause it’s $5500 now. IMO- those guys would be better off buying NOW- even if it’s gonna crash vs the chance they wait another 10 years. But- I’d say the sweet spot is this: waiting 6-12 months. Seeing what shakes out. IF IF IF interest keeps going up & recession hits- DISCOUNTS & I’d buy then. Problem is: many can’t & wont. But that’s precisely when to buy!!! The wild card: if Trump wins (basically if we have a fair election- which I am not 100% confident about) & we get a recession before that…. He wins, interest rates come down- I’d scoop up land EXACTLY THEN as he will likely fix economy with some time & finance costs are now coming back to the 5% range again (if that’s the case).

First farms, farms to keep, buying neighbors, cash buyers: all will & should buy now. SPECULATORS & those borrowing $…. Patience will be rewarded, IMHO. i could be totally wrong on every drop I said above too!!! ;)
 
deerdown said:
I've been waiting for the stock market to drop for 5 years.....and still waiting.... no one knows what's going to happen, we're all just guessing. Logic seems out the window anymore, at least my logic and assumptions....I sold a farm about 10 months ago and in retrospect, sold it too cheap, again, expecting the land market to drop.
Now, there are 2 farms coming up for auction near me and I think I'm a bidder for 1 of them, the question now is how to value it. I don't have to have it, but it's fairly close to the home farm and would be a great hunting farm and has income. Decisions, decisions......
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You missed the boat somehow… didn’t the stock market drop 30+% first half 2020? Sorry couldn’t resist…
 
Muskrat24 said:
You missed the boat somehow… didn’t the stock market drop 30+% first half 2020? Sorry couldn’t resist…
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Yep we had a pretty significant correction when COVID started. If you bought in March 2020 on the correction you could have doubled your money.
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John Young said:
Yep we had a pretty significant correction when COVID started. If you bought in March 2020 on the correction you could have doubled your money.
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Another major correction is coming. I’m waiting impatiently for it!


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Muskrat24 said:
You missed the boat somehow… didn’t the stock market drop 30+% first half 2020? Sorry couldn’t resist…
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Yep, you're right, I was in a state of shock like many when that happened.
I meant/mean a market drop that was caused by normal financial fundamentals,
Although I was going to buy a farm that came up for sale during that time but put a buddy on it who bought it instead. I guess owning land doesn't scare me as much as the stock market.
 
Personally I don't see a 40-50% hair cut to the prime land market coming. Here's why. Their are to many people with to much money waiting on the sidelines. 20k land currently isn't going to 8-10k it isn't going to happen. Will it sluff off? I think it will but not 50%.

Now Rec land and land that doesn't provide much financial ROI, that will be another story. If it's bringing 5-7k or more for Rec land that's lunacy as far as I'm concerned. Those pieces may drop by 40-50% but it will take more than interest rates to do it. If EHD, CWD move in hard and wipe out large percentages of the deer heard, who's going to pay big money to hunt very few deer? I believe that is part of this equation.
 
Trapshooter1 said:
Personally I don't see a 40-50% hair cut to the prime land market coming. Here's why. Their are to many people with to much money waiting on the sidelines. 20k land currently isn't going to 8-10k it isn't going to happen. Will it sluff off? I think it will but not 50%.

Now Rec land and land that doesn't provide much financial ROI, that will be another story. If it's bringing 5-7k or more for Rec land that's lunacy as far as I'm concerned. Those pieces may drop by 40-50% but it will take more than interest rates to do it. If EHD, CWD move in hard and wipe out large percentages of the deer heard, who's going to pay big money to hunt very few deer? I believe that is part of this equation.
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I don’t think this thread is talking about prime farm ground. We’re talking mainly rec land.


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People have been paying 5-6k an acre in west central Illinois for years, and the hunting isn’t half as good. I think you’re dreaming if you think a 40-50 percent drop is coming, that would put most rec farms back in the 2500-3000 range, haven’t seen those prices since 2015 in my area. Also as mentioned there’s more reasons to keep a farm right now than sell one, as long as inventory is low prices probably won’t make a drastic change.
 
MarkF said:
People have been paying 5-6k an acre in west central Illinois for years, and the hunting isn’t half as good. I think you’re dreaming if you think a 40-50 percent drop is coming, that would put most rec farms back in the 2500-3000 range, haven’t seen those prices since 2015 in my area. Also as mentioned there’s more reasons to keep a farm right now than sell one, as long as inventory is low prices probably won’t make a drastic change.
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I agree. Prices are continuing to go up for solid rec farms moving South and West of IL, have been for years. The further you go S and W, the further behind in pricing they seem to be. Kansas and Missouri are good examples. Couple years ago you could buy rec farms for 2500/acre. Now the same exact farms are 4000/acre. More and more people across the country want farms and are willing to pay. I could see a 20% correction coming at best, but I do not see anything like a 40% drop in rec ground on the horizon. Only thing that I think could make that happen on a farm to farm basis is if someone is upside down financially and absolutely has to sell it, IMO
 
This thread is a prime example of what my investment decisions usually look like. Lots of back and forth, some common arguments to the more extreme opposing arguments. Almost every farm I bought I've gone thru the above in my head. Since 1995 I've done the above discussion with my wife and in my head, the end result is: If I would've started buying everything I could have back then, I've had a LOTTA land today, and it'd be worth many many peso's..... Our economy is built on an inflation number and they will continue to debase the dollar....granted, there will also be resets, but in the long term, you'll be fine if you can weather the downturns.
 
JBAGS said:
I agree. Prices are continuing to go up for solid rec farms moving South and West of IL, have been for years. The further you go S and W, the further behind in pricing they seem to be. Kansas and Missouri are good examples. Couple years ago you could buy rec farms for 2500/acre. Now the same exact farms are 4000/acre. More and more people across the country want farms and are willing to pay. I could see a 20% correction coming at best, but I do not see anything like a 40% drop in rec ground on the horizon. Only thing that I think could make that happen on a farm to farm basis is if someone is upside down financially and absolutely has to sell it, IMO
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The only fact is time will tell. But I believe your underestimating the power of a very nasty recession that’s on our doorstep. But again we should know for sure what’s going to happen in the next 12 to 18 months. But I’m betting rec ferns in Iowa will be back around $3800 to $4500 an acre. If really hits the fan and WW3 on top of it there is a very good chance. Debt in America is at all time highs, Interest rates have been aggressive and inflation is stupid. Defaulting has already started. Already seeing foreclosure up, car loans at all time highs for defaulting and land that’s priced above $6k an acre sitting. Lots of price reduced signs. Anything is possible but this country is sitting in a horrible position going into this recession that’s on our doorstep. But again we should have a good idea where we stand as a country by 2025. But nothing is safe from the trickle down effect. Not even land. It would certainly be smart to wait another 12 to 18 months if your in the market for a new farm. Now if you saw the farm of your dreams and were planning on retiring with it and give it to your kids then it doesn’t really matter much. But if it’s an investment like most big financial decisions I think you could easily save a few hundred thousand between buying now and waiting until late ‘24.


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