Buck Hollow Sporting Goods - click or touch to visit their website Midwest Habitat Company

$30,000 an acre farm land.

Slick said:
There will be one.....when and how much is the unknown.........Like the stock market when everyone says this is the new norm of high prices and it can only go up a big correction happens........we are now seeing the big firms Goldman sachs, Amazon, Twiiter, Cisco, Fedex....etc. laying large amounts of people off. This will come to small town America in time.

Imagine what would happen it a War broke out between two major counties.


https://forums.bowsite.com/tf/bgforums/thread.cfm?threadid=494861&messages=73&forum=4
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Bluedog above mentioned “roaring 20’s” & what we went through in 1930’s. Spot on. That cycle has actually happened countless times over & over. Maybe to different extents but it always happen. It’s gonna happen again just like above. Spot on…. Certain sectors of the market are starting to have pain.

Will there be dudes with huge bank accounts & majorly wealthy who can buy? Absolutely. It was even the case in the 1930’s…. Most the country was in the toilet (as if joe Biden had been running things for a decade & things crashed at insane levels) BUT - there was still that top 5% who had $ & a % of that with STUPID $!!! & those rich folks who did buy things up then became more insanely rich when market rebounded.
I’ve been through 3 cycles when it was down, personally when I was buying land (or sellIng/swapping)…. After 9/11 it tanked. & some cattle folks in big trouble. It slowly came back & peaked in 2007…. 2008- it crashed again. Slowly came up….. rec stayed somewhat flat while tillable BLEW UP in price in 2014 or so….. rec steadily kept going up- slowly. THEN….. around 2015-2019… . tillable started sliding way back. It softened up north & in southern iowa it became majorly discounted.
Then the final or most recent BOOM….. tillable went from “soft” to INSANE!!!! Huge rapid spike in price. Rec went from stable to massive increases in a 1.5 year period. Both exploded.
So that’s 3 times in 20 years I’ve seen. 80’s had a HUGE change in value. 90’s were not a cake walk.
Every decade you go back, u will see a a run up and a pull back. Some worse than others and some decades multiple ups and downs.
We have another coming. There will always be dudes with huge bank accounts. Or corporate $ or rich investors. Always. But- it’s more of the “average guy” with middle of the road $ who actually dictates the price more so than the rich. Rich folks: prop the market up from tanking when it gets bad. Or they will drive up prices up to new records….. but they don’t dictate the prices. It’s the guys from the bottom 1 to 80% that actually create a rush in prices or a crash in prices. Those are the folks people need to pay attention to. When they have trouble- the land market will have trouble. When the economy as a whole tanks or grain prices dip hard- that 1 to 80% class of folks will have problems and the market will retreat. If the rich do get hit hard in a deep recesssion- that’s when price crashes happen as the rich have to pause for a while. Some level of correction is coming just like it has for any time in history. Just don’t know when & if it’s a correction or a crash. Most likely correction but always have it in your head “can I handle it & what do I do if there’s a true crash?” (Buy more would be ideal answer ;) )

But- back on point- u able to buy land and find what u want & can do it…. DO IT!!!!!
 
It only takes $2-$3 ! That’s it … Corn drops 2-3 dollars a bushel and it’s a break even and suddenly the extra cash is not there.

But that cycle is not going to happen this year In my opinion…Still extra cash around and old money !

Corn prices are probably going to stay high for a year or two .
 
Hardwood11 said:
It only takes $2-$3 ! That’s it … Corn drops 2-3 dollars a bushel and it’s a break even and suddenly the extra cash is not there.

But that cycle is not going to happen this year In my opinion…Still extra cash around and old money !

Corn prices are probably going to stay high for a year or two .
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Agree. Looks strong for a while. For folks who are farming long term or speculative on prices…. One thing to consider…. The Government NEEDS inflation to come down. Food (corn is HUGE part of this) is a large component of inflation. The Gov will do “things” to push the price down. It likely will take a year or 2. Who knows. But we have fed pressure to reduce price.
Do most of the folks care about this? NOPE. They do things “based on todays prices & profits”. & most ignore it period “I’ll figure it out if prices tank”. Some can & some won’t make it if it tanks. Like any market or any business in history.
Here’s a 59 year chart on corn. Most people don’t care or don’t pay attention to what they think future to bring. Also because we don’t know. & we don’t. But we sure can say “it’s at record highs”. Probably will go up or stay high for a while. Who knows. But dang, when things at record highs - I’d be cautious. I’m personally cautious because I keenly remember what those big dips felt like.

E4775AF3-914E-4C58-A9AF-60C26D715562.jpeg
 
People have short memories and don't remember, or say "this time is different". Maybe, maybe not.

The saying "history repeats itself" was for a reason. I don't think we're going to see a major correction in land prices based on crop prices in 2023, but it'd sure be nice to see a softening of the land market. There's nothing out there I'm willing to buy, and there's not a lot to chose from to begin with.

The problem with selling some ground into this higher market, is you have such a short time to find something to 1031x into. If they gave you 2 years, then it might be worth the gamble, otherwise, you pay capital gains and then have to try to find something at a discount equal to the tax you paid after the 1031x window closes. So you'd need to find something at a 18.8% or 23.8% discount to break even is how I look at it...maybe I don't know the tax code correctly, but I think capital gains is 15 or 20% based on your income level, plus the 3.8% obamacare tax on top... am I figuring that right?

While I wait for an opportunity, at least TBills and CD's are paying something these days so you don't feel as bad about not putting your money to work like when they were paying 1% or less.... Still I realize the system has always rewarded the risk taker.
 
I have read several articles about personal debt in the US. Its at an all time high and in the last year and half has increased substantially. Assuming inflation is the reason behind that. That is going to cause people to decrease discretionary spending which in turn will affect everyone. I think being patient right now and letting all the downward pressures in the market take hold is the best path right now. I so wish I had purchased land with a self directed IRA!!!!! I would not hesitate to sell now and not have to worry about gains then in a year or two when the crazy leaves the market buy more land. Wonder if I could sell the land I hold now to my self directed IRA at just above original cost(very little gain to me) then turn around and sell it at the true market price and not have to worry about the gain? My old boss would refer to that as "skating on black ice" ........something to think about in the future
"The 15 percent year-over-year increase in credit card balances marked the largest in more than twenty years."

https://www.newyorkfed.org/microeconomics/hhdc
 
Here’s where my gut is. I find myself thinking about the land market daily…. No one knows the future but I promise, everyone involved has an opinion of where it’s going to go whether they admit it or not. & regardless of whether they are right or wrong.

Here’s what popped into my head for the last couple months….. in simple form…
We keep raising rates with a lot of demand. Very much like land in the 1970’s. We are getting to the point where rates are eliminating a pool of buyers & likely will lose more. But- inflation is no where near under control. What do we have next???? Recession!!! It will be a recession with high rates & inflation that’s still not tamed. Like 1970’s ……. When we had recession but inflation was “a bit lower” (excuse to reduce rates but inflation not controlled)….. they lowered rates. Which, I think we are gonna do same exact thing. The second the rates come down…. And!!!!!…. The new Government policies of last 15 years, will flood the market with recovery dollars- adding to inflation. All those buyers will be back plus some. Things will have a temporary major run up. THEN….. inflation that wasn’t under control will come blazing higher. & the fed will again chase it with rising rates. THAT COURSE is exactly what happened in the 80’s farm crisis (aside from the level of gov stimulus we now use readily) They claimed recession & “reduced inflation” called for lowering rates back down. What resulted was total chaos & run away interest & inflation.
Again- the parallels are there. Will it go down like 70’s & 80’s???? Who knows. The more time that goes by and how bad the gov wants any excuse to lower rates when inflation is NOT under control- leads me to believe we really could repeat the 70’s to 80’s cycle that brought huge downturns. If I was at a casino table with $100…. I’d bet we have something relatively close to the model that played out In 70’s & 80’s….

Again…..
70’s - Raise rates to combat inflation. Ground was rocketing up. Then recession hit but inflation was NOT under control. They lowered rates after recession hit….. ground prices got insane in early 80’s on crazy rebound… Then inflation was on steroids- couldn’t control. Rates went bananas and then record high grain prices collapsed. Ground tanked. At a minimum- I repeat, I think it’s insane not to consider the possibility. I kinda think we have a repeat at some level. Probably play out over 5 years.
Doesn’t change a thing for me and those with major stability shouldn’t let any theory change what they do. But do consider all possibilities. Hope I’m wrong & I very well might be. But I’d bet we got a major problem coming with rise, fall, & rise of rates while inflation won’t die. When the day comes that grain prices come back down & rates are still working on inflation…. That’s how a disaster happens if we truly don’t control inflation. As of now- they do NOT have inflation tamed and we are very likely going to recession. 2 dominos that echo the 70’s. Will the rest repeat to any extent like the 80’s???? Time will tell …. I personally have my own opinion & I think it’s wise to form your own or at least understand all scenarios that are possible.
 
Anything could happen, but I don't think Powell will reduce rates due to recession and reduced inflation as you mentioned. Powell has acknowledged this is exactly what caused the problem in the 80's and says he is determined not to see it repeat. So, he's aware, and is a study of that period of time and has commented on it more than once. Again, we're just sharing just individual perspectives on what may happen.
To me, the FED is just the vehicle to make the rich richer, and gravitate to 2 classes, the rich and politically connected and the poor. The middle class continues to shrink, been going on for decades, accelerated in the last 10 years. A little bit of conspiracy theory for sure, but watching what the government has done recently makes me think that way. Lots of middle class folks got nothing from the money that was thrown around the last 4 years, but the rich and the poor got their share....
 
Got a postcard in the mail last week of some farm ground coming up (they kept the draw/woods out). Starting bid will be 19,000- talked to a local who figured it very well could hit 35,000/acre.
 
All the discussion above....
Clearly I love it. This is where I have all my eggs. I’m ok with whatever the market does.
The economics or concerns of it.... If you are reading this.... YOU are in probably the 10% that actually thinks & prepares for changes in the market....
The other 90% finds: HISTORY & ECONOMICS BORING!!!!!! The 90% are far more interested in things like: BIG DEER or BIG PROFITS FROM CROPS. Which, dang, those are a lot of fun, I admit it!!!! But, they are so fun that it often clouds the judgement of people. I hope folks here pay attention to both sides.
& clearly.... as I was buying land in my 20's around 2001 into 2006, 2007 & Market crashed in 2008.... I "ignored all of it" & kept thumping along.... Wouldn't change a thing. In my older years, I'm glad I know what a 2008 felt like though ;)
 
With all my mixed remarks…. The one that’s important is for folks wanting to buy land- do it if able. To put my $ where my mouth is…. I just bought a bit over 100 acres east of Des Moines. About 80% income with 64 csr I believe. Most is in CRP. Enough timber to hunt for sure & I can make that CRP way better. Good return farm. Low $5’s. For this market, IMO- a good buy. On pavement within <45 mins Des Moines & multiple building locations (I’m not going to build but nice to know). So…. Still a few sensible buys & if u are buying them cautiously - clearly long term- all works out.
**if this same farm was magically transported to NW iowa with exact same soils- YIKES!!!! Who the heck knows…. $15k for sure. That’s the crazy part. To me, someone not married to a region of the state - that stuff makes no sense for me personally. Buy in areas with best bang for buck if able. & there is major differences by region. +/- to both scenarios but I think much more opportunities in the situations like I described buying vs N iowa, etc.
 
1980 was a long time ago, so people's memories probably vary. From what I remember of the '80's farm crisis was that interest rates were in the upper teens, crop prices were strong and banks were writing loans with little to no down payment. When crop prices went down, farmers couldn't withstand the huge interest payments on the note and had to walk away. I think this set the stage for most ag lenders now requesting around 30% down, but my memory might not be perfect.

That's why I think things are a little different now, as lots of these recent purchases are cash down, 1031 exchange, IRA financed, and stock market escape capital being used. Earlier in this thread, there were statistics on "loans on land" and lots of ground is held outright. I think this buffers the market from large swings caused by movement of the Fed on interest rates. Just my $0.02.
 
JNRBRONC said:
1980 was a long time ago, so people's memories probably vary. From what I remember of the '80's farm crisis was that interest rates were in the upper teens, crop prices were strong and banks were writing loans with little to no down payment. When crop prices went down, farmers couldn't withstand the huge interest payments on the note and had to walk away. I think this set the stage for most ag lenders now requesting around 30% down, but my memory might not be perfect.

That's why I think things are a little different now, as lots of these recent purchases are cash down, 1031 exchange, IRA financed, and stock market escape capital being used. Earlier in this thread, there were statistics on "loans on land" and lots of ground is held outright. I think this buffers the market from large swings caused by movement of the Fed on interest rates. Just my $0.02.
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Spot on.
The fact that it does require around 30% down now does stabilize the market. When folks get in trouble, they usually can sell it & get out of it vs foreclosure. Unless it goes down over 30% of course.
One investor down my way bought a ton of tillable at the peak back in 2014-ish. For good tillable that was pretty wet & needed a lot of tile- I believe they paid about $8k back then. Which was high for this region & how much work it needed. They sold this to a buddy of mine for $4800 in 2020 - right before prices came back up. Think of the timing!! Probably could sell it for what they paid for it or close if they would have held. It was a very large company & they explained that they were going to “write off the loss” or something to that effect.
Very few can think back to the 80’s. Heck, most folks can’t think back to 2015 to 2019 & how tough things got. Human nature has no memory. Just like the builders that went bankrupt in 2008…. Same dudes were back in 2012++ with fleets of brand new trucks, hiring tons of employees & borrowing huge amounts to build houses. People follow the same path that led to previous problems over & over. Short memories & history repeats. Always has been like that and always will be for a big portion of folks.
 
JNRBRONC said:
1980 was a long time ago, so people's memories probably vary. From what I remember of the '80's farm crisis was that interest rates were in the upper teens, crop prices were strong and banks were writing loans with little to no down payment. When crop prices went down, farmers couldn't withstand the huge interest payments on the note and had to walk away. I think this set the stage for most ag lenders now requesting around 30% down, but my memory might not be perfect.

That's why I think things are a little different now, as lots of these recent purchases are cash down, 1031 exchange, IRA financed, and stock market escape capital being used. Earlier in this thread, there were statistics on "loans on land" and lots of ground is held outright. I think this buffers the market from large swings caused by movement of the Fed on interest rates. Just my $0.02.
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It seems crazy now to think that land was going for $250 an acre in northern MO during the 80's with the high interest rates.

Not primo river bottom ground.
 
deerdown said:
1980 was a long time ago, so people's memories probably vary. From what I remember of the '80's farm crisis was that interest rates were in the upper teens, crop prices were strong and banks were writing loans with little to no down payment. When crop prices went down, farmers couldn't withstand the huge interest payments on the note and had to walk away. I think this set the stage for most ag lenders now requesting around 30% down, but my memory might not be perfect.

That's why I think things are a little different now, as lots of these recent purchases are cash down, 1031 exchange, IRA financed, and stock market escape capital being used. Earlier in this thread, there were statistics on "loans on land" and lots of ground is held outright. I think this buffers the market from large swings caused by movement of the Fed on interest rates. Just my $0.02.
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Could not agree more. ^^ (Note - somehow I managed to make it look like I was quoting "deerdown", when I am really quoting "JNRBRONC". :) I can't seem to change it either. ) It is Jnr that I am agreeing with here...go figure.

While there may be some elements in common with now and the early 1980's, it is a mistake, IMO, to equate them. The giant difference is how the land purchases are being financed/paid for now v. then.

Analyze who is buying and HOW are they paying for it and I am pretty sure that you will see that this time we are in now is NOT the same as the early 80's. That doesn't mean that there will not be a correction...there sure could be. But I can't imagine that it will come close to approaching the decline in land values from back then. (Personally, I hope I am wrong here, because I would be a buyer at something less than the going rate today.)

Another factor to consider...there has been a GIGANTIC increase in the money in circulation in just the past few years...a great deal of it, nearly all of it, due to gubmint actions. Think Quantitative Easing(QE), Paycheck Protection Program(PPP), "one time" stimulus payments during Covid and other massive government programs too. All that "money" will go somewhere in this economy and a lot of it has been directed towards land purchases. We are talking trillions of dollars. (I agree with the premise that "deerdown" was relating in post #29 above.)

For anyone that is financing land right now...I would be nervous myself. However, for those that are just straight up buying it with cash, future price corrections are close to meaningless.
 
letemgrow said:
It seems crazy now to think that land was going for $250 an acre in northern MO during the 80's with the high interest rates.

Not primo river bottom ground.
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Yep...all kinds of prime hunting farms were available even into the '90's for what we consider peanuts now. Top end stuff could be had for $450/acre, or less, in a lot of SE Iowa.
 
Sligh1 said:
With all my mixed remarks…. The one that’s important is for folks wanting to buy land- do it if able. To put my $ where my mouth is…. I just bought a bit over 100 acres east of Des Moines. About 80% income with 64 csr I believe. Most is in CRP. Enough timber to hunt for sure & I can make that CRP way better. Good return farm. Low $5’s. For this market, IMO- a good buy. On pavement within <45 mins Des Moines & multiple building locations (I’m not going to build but nice to know). So…. Still a few sensible buys & if u are buying them cautiously - clearly long term- all works out.
**if this same farm was magically transported to NW iowa with exact same soils- YIKES!!!! Who the heck knows…. $15k for sure. That’s the crazy part. To me, someone not married to a region of the state - that stuff makes no sense for me personally. Buy in areas with best bang for buck if able. & there is major differences by region. +/- to both scenarios but I think much more opportunities in the situations like I described buying vs N iowa, etc.
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Low $5k per acre, <45 mins East of DSM, for that type of land?!?! Is it cursed or something? Non-tillible timbered ravine filled land is selling at no less than $10k per acre, much further out from DSM. What's the story?
 
I approached my neighbor a few years back about buying ~16 acres of his wet hillside timbered pasture. I made what I felt was a reasonable offer, and he wanted $23k per acre. NOPE! Not from me anyway. It can't be farmed, and I doubt it can be developed with how badly the water seeps out of the ground. In the off chance he gets his asking price from some other sucker, my net worth will double or tripple overnight.
 
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