Current interest rates!
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sep0667
Land of the Whitetail
This right here. This was me. I got just over 3% or something a couple years ago and am comfortably making the payments, no problem, easy-peasy. But with rates 2.5-3 times what they were just a couple years ago and rec/combo ground still continuing to climb in price I couldnt swing it now or atleast wouldnt want to. I was telling several people how affordable this was and how if they could own their own 30-100 acres etc, that if i could do it so could they, but for that average everyday person now it would be very very difficult and probably not a good idea. I watch listings several times a week. This is all fun to follow and Im super lucky i got in just before rates started to climb, pure luck. IMO the average every day person is out, and if they are not, they need to be for their own sake. I'd imagine stuff selling lately is to people that are better of, six digit incomes, business owners etc.
daniel93077
Active Member
I can't make sense of it. I have heard plenty of people say "when I bought, people said I was crazy and it didn't make sense" and I know "this time it's different" is always said....but just from a rational numbers standpoint this time it really does feel a good bit different than any other time in the nearly 30 years of my adulthood...and not in a good way. The prices combined with rates are just crazy. Yes, 20 years from now I think it's almost a forgone conclusion that the price of ground will be higher than it is today. However, it's also possible for the prices to stagnate for a number of years, or for prices to come down, or for rates to come down...and I have to think one of these is going to have to happen at some point here. I just can't see a scenario where this is sustainable (unless they open up Iowa completely to non-residents) or where these prices could hold up against a shock to the economy. Back in the mid/late 90's I made very little money, was young and had no real idea how to value something like land and even with that I still remember looking at Iowa land prices and thought land seemed like a steal....and it was! Today, I'm older, hopefully wiser, and cashflow many multiples more than I ever dreamed of back then and I look at this price/rate combo and think..."Insane!".
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I think tides have started to turn a bit on the market. Starting to see price reductions on active listings.
Daver
PMA Member
Yep, definitely some price softening going on now. But it is also true, IMO, that the asking price for many listings is quite high to start with. Things are still trading high IMO...just not as high. I see this as good news.
Daver
PMA Member
(FWIW, I posted essentially this same message in a different, but similar thread awhile back.) Rising interest rates will definitely stifle the buyers that are financing their land purchases...but it has little impact on cash buyers. And there are still cash buyers out there.
Short, short story...the whole Covid thing was in one form the biggest wealth transfer in the history of our nation and the some of the "winners" of that whole fracas still have cash, sitting there.
Some of those cash buyers are patiently waiting now, hoping for additional price drops to then come in and buy up more land.
Hardwood11
It is going to be a good fall!
Cash buyers watch the market and won’t pay crazy prices ! Well at least most will not?!! You see an occasional crazy price, but that might be a neighbor buying it — had to have it (situation) .
daniel93077
Active Member
I 100% agree with your assessment.
tall@wide
PMA Member
I hope so. I'm standing by waiting for more inventory to show up
That's what I'm doing . I'm happy with what I have, but am waiting to find some deals before I buy more.
hillrunner
PMA Member
How I've felt for a while now....
So- 3-4 years of Kermit sitting there “wow it’s high” now to “how much longer can this craziness hang on? When it gonna correct?”….
Here’s the deal IMO…. It’s here & it’s gonna correct. Slow or “major reductions” who knows. BUT… here’s the KEY on these CYCLES…. Above Kermit was waiting for “4 years” let’s say…. When it does correct…. I will almost guarantee it’ll be the reverse for say 1-4 years…, “waiting for market to rebound again”…. Picture of Kermit. That period or pendulum will swing other way. Shifting from 2020-2023 seller’s market to a Buyers market for a lengthy period of time. Bad & Longer if deep recession. Then- it will take a big event to bring it back…. “Interest rates went back to 4-5%” & it still would need another thing like “economy grew” & things rebounded.
***One wild card that COULD speed the cycle way up…. Things slow down over next year. Maybe rates get lowered…. Then- TRUMP gets elected…. Economy rallies from that one event & gets pushed back up. Very possible. “calculated gamble” on that issue would be this… if prices slump worse yet (THEY WILL!!!!!) before election & u think Trump is gonna win… (& maybe rates down SOME) - buy some before the election!!! **this is the speculator in me btw & probably doesn’t pertain to most but still fun to think about.