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Land prices / insane!!!

JBAGS said:
Same dirt, not really worth a whole lot more money but the number is a shock to look at.
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The puzzling thing is that wages and income haven't caught up with inflation yet and that should have a cooling effect on land sales. I think that's the shock. The established business owners can pass the inflation on to their customers and the truly wealthy have ways to keep up with inflation. They are your drivers of the land sales and prices today.
 
jflournoy said:
Just my opinion, but I believe all the money printed during Covid for PPP and just that was given to individuals has a direct correlation to the land market shooting up. Did inflation happen at the same time, yeah, but inflation didn't drive *demand* up to crazy levels all of a sudden.
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Correct. ^^ I have shared that same observation here previously, I just don't remember what thread it was in. But I know people personally that received high 6 figures in "found money" via the PPP. (Meanwhile, other business owners, despite receiving PPP money still couldn't make it. The outcomes and situations surrounding this phenomenon were HIGHLY disparate, unlike anything else like it that I can think of, FWIW.)

But yes, some suddenly had big money essentially given to them...and some of them turned around and plugged that money into real estate or are still hanging onto a wad waiting for the right thing to come along.
 
Thinkin Rut said:
The puzzling thing is that wages and income haven't caught up with inflation yet and that should have a cooling effect on land sales. I think that's the shock. The established business owners can pass the inflation on to their customers and the truly wealthy have ways to keep up with inflation. They are your drivers of the land sales and prices today.
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Another thing that I have shared here previously is that the whole COVID thing, to include PPP, et al, was the greatest transfer of wealth in the history of our nation. You are right, established business owners are generally in a far better position to not only weather a storm ,but to come out the other side of it with much more resources than is the average person.
 
There was an owner of a Vehicle dealership in my area that got a lot of $$$ from PPP! Within a year he bought a sweet 240 acre parcel—“cash” !
 
I know a couple biz owners who mis spent ppp and the G came after them. I guess some slip through. Not enough resources to look at everyone.
 
If one is a first time land buyer hoping to move into larger, and larger acreage over time with equity built up in a property....price matters...and even more so when leverage is applied. I'm not anti-long term land investment but I am anti-expensive. Basic economics would suggest low inventory + high demand = high prices. The land is appropriately priced for todays market dynamics and we really have no idea what's going to happen next to impact these dynamics one way or another. For the time being I err on the side of caution. I'm certainly more in favor of all cash purchases vs. using leverage.
 
theDoorman said:
Land is not getting more expensive. The tool (dollars) used for measuring land prices are becoming less valuable.
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I'm no economist, but I think you're only half right. Dollars *are* becoming less valuable, but land *is* also getting more expensive. Inflated dollars don't increase the *demand* for land, but *demand* for land could definitely contribute to inflation over time. When demand outstrips supply, that means whatever it is that's in demand, *is*, in fact, more *expensive*. Demand for southern Iowa land over the last couple years has well outstripped supply, and as a result, land has in fact become more expensive, inflated dollars notwithstanding. Hunting land prices in southern Iowa haven't gone up 40%+ in 2 1/2 years simply because of inflation.
 
jflournoy said:
I'm no economist, but I think you're only half right. Dollars *are* becoming less valuable, but land *is* also getting more expensive. Inflated dollars don't increase the *demand* for land, but *demand* for land could definitely contribute to inflation over time. When demand outstrips supply, that means whatever it is that's in demand, *is*, in fact, more *expensive*. Demand for southern Iowa land over the last couple years has well outstripped supply, and as a result, land has in fact become more expensive, inflated dollars notwithstanding. Hunting land prices in southern Iowa haven't gone up 40%+ in 2 1/2 years simply because of inflation.
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I do agree with you but that Covid package was what 35% of m2 supply and 60% gdp. I think it directly correlates.

Either way we are getting screwed by Washington.
 
theDoorman said:
I do agree with you but that Covid package was what 35% of m2 supply and 60% gdp. I think it directly correlates.

Either way we are getting screwed by Washington.
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If you want to say that the increased demand for land had some connection with the economic forces that started the money supply on a strong inflationary upswing (money printing as a result of COVID), then I'd agree with you there. But I think the primary driver of the rise in land prices is simply supply (low) and demand (high).
 
jflournoy said:
If you want to say that the increased demand for land had some connection with the economic forces that started the money supply on a strong inflationary upswing (money printing as a result of COVID), then I'd agree with you there. But I think the primary driver of the rise in land prices is simply supply (low) and demand (high).
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Yes. this is the way.
 
Hardwood11 said:
There was an owner of a Vehicle dealership in my area that got a lot of $$$ from PPP! Within a year he bought a sweet 240 acre parcel—“cash” !
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Using the $$$ as it was intended…..

I’d like to know how much of that $$ didn’t go to the workers.


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IowaBowHunter1983 said:
PS. Skip and I have bantered for years about renting vs buying re houses and their investment value. ;)
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Awesome thread. Love being among like-minded. Before we bought our first family home, I did the math and financially, it would have been better for us to stay renting and invest the difference than “investing” in a house. BUT 2 kids in a 2 bd apartment 6 plex wasn’t going to make a happy home. So we bought the house next door and a few years later bought the 6-plex.

Now my 26 yo son and his wife have bought a duplex and live in one side for a year, bought another duplex and moved into it. Great cash flow. If they do that for 5 years, then start selling and upgrading, they will be set for life. Proud of him, especially while their other friends and relatives in same life stage are buying brand new homes.

Many ways to skin the cat, but all start with delayed gratification. As my FIL likes to say: “if your outgo exceeds your income, your upkeep will be your downfall”


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Duplex, Triplex, 6plex can all be good investments! The real key is are you handy ? Can you make small fixes?

I’m not handy so I’ve passed some good buys. Land is easier for me and I understand it better, get to use it for hunting and recreational and no late night calls to fix a toilet !

I have seen guys make a killing on rental units, and more power to them!! They have a good tolerance for the unusual!
 
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I hinted at this earlier, maybe this thread, about NR landowners and nobody bit.

At the local DNR meeting last Wednesday, a guy went off on NR landowners from Michigan and how they control a large rec farm next to his and they won’t shoot does. I got no issue with that, my point is why do we have NR landowners? Most likely due to Iowa’s deer management/season structure, but what does rec ground fetch in their home state? I thought I heard it’s been $10K/acre in Pennsylvania for the last 10-20 years. Not sure what rec ground fetches in the mitten.

If a NR can get 2:1 in Iowa, why wouldn’t they?

So if you are an Iowan in the game looking to purchase rec, you are in a national rather than local market.


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