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Land prices / insane!!!

Through a family member there might be a deal for me to be had. Not in a great part of the state, but definitely a leap frog property if the opportunity presents itself. They were talking 5k for AG and 2 k for timber 68 acres in total. Hopefully it works out to get my feet wet in the owning the ground part of it.
 
Khughes2345 said:
Will the land go down in price though? I’ve been looking seriously for the last year, but really don’t want to pay 10k/acre. I’m not in a rush and will jump on a deal when I see it, but right now prices in my area (eastern ia) are still a little crazy. They have gone down in the last year but not by a whole lot.
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IMO………..,.,.,.,.,., YES. I could be wrong. I think it’s going to “dip” or slow. So my gut says this…, this part is more guess/gut/speculation that I may be wrong about….
Say u had to pay $10k. & there were 3 other buyers interested. IMO- in a year- I think it’ll be u and maybe one other buyer. & both of u will be more cautious…. Instead of $10, maybe it’s 8 or 9k. I think it’ll be “discounts & deals” - not steals.
Now- what COULD change all that from deals to steals…. (This is AG market and hunting market combined into one little summary of opinion….). IF IF IF …. Corn settles around $5 for a while AND Interest rates hit the 8-10% mark for a sustained period- we have a big reduction. IF IF IF we get a deeper recession on top of all that - bigger reduction yet.
*with all that said- the areas fairly immune to all this will be premium N iowa flat black farmland which personally I don’t see prices getting devastated in most any circumstance. But they sure can retreat & slow way down.

The unknowns: -how high will interest really get? They for sure are gonna keep going up. -Will commodities come down? Likely they do but uncertain. -Will we have recession and to what degree? Fairly likely - to what degree- who knows. -any other economic issue we weren’t planning on?? That’s where it may or may not get interesting.

IF it gets uncomfortable for most buyers to buy- that, IMO, is when a guy buys if they can do it. Think we will know the answer over the next 18 months or so at most.

****and yes, the current environment on land sales is much different than 6-12 months ago. It’s much slower. Less buyers. Better deals TODAY than before. We needed this slow down for health of market. & it’s a lot slower!!! That downward trajectory to keep slowing is very likely to continue.
 
I believe land has the ability to follow behind some of the "hot" real estate markets from the past couple of years. It was / is "sexy" in the beginning, but it loses its luster quickly for those who aren't truly invested into it.

For example, I keep tabs on some vacation properties down in a "hot" area of Florida. Here is the history of 1 property:


09/25/2022Price Changed$1,150,000$663NWFlorida
08/25/2022Price Changed$1,250,000$720NWFlorida
07/29/2022Price Changed$1,385,000$798NWFlorida
05/29/2022Listed$1,400,000$807NWFlorida
08/31/2020Sold$568,000$334Public Record

Property is still for sale. And, this is very similar to what other properties in that market are like / doing. All it takes is for a couple of folks to decide they want the $, and they will take it and run. I know they don't want to, but once this property and others crack under that $million, the flood gates could open of dumping and running.

I know land has different variables than investment / vacation homes. However, land is boring to most investors. So, if they have another business opportunity, they will cut the land loose and move on.
 
Buckhunter92 said:
Through a family member there might be a deal for me to be had. Not in a great part of the state, but definitely a leap frog property if the opportunity presents itself. They were talking 5k for AG and 2 k for timber 68 acres in total. Hopefully it works out to get my feet wet in the owning the ground part of it.
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I would say jump on that.
 
Still no rec land inventory where I am in west central Illinois. I am starting to see a little ground that sold a couple years ago back on the market for twice the original selling price. We have alot of non-resident rec landowners around here and what little inventory there is seems to be some of them trying to turn a relatively quick profit.
 
I think prices have moderated. Things have definitely changed in NW Mo in the last 6-12 months. I listed a rec farm for sale in July, put a contract on it in Sept, and it didn't appraise at contract price, appraisal was 10% below agreed to price. Realtor was very surprised, said he hasn't seen one not appraise out in a very, very long time. Contract price was reasonable for 6-12 months ago comps, but not for recent sales apparently. I lowered the price to get it sold. The market/interest rates have me convinced land prices are headed lower, and it's not a farm I wanted to keep long term so I was happy to sell it.
Unless you can find a deal, there will be better opportunities coming.. .02
 
I agree, Things have moderated some.(It really needed to, Waste ground has been bringing 4500-5000 with 0 return) I'm going to find out just how much next week, 3 farms just up the road 4 miles going to sell next week. Bluff country timber, and rec ground was bringing 6-7,000/acre 2 counties east of us.

7% interest will definitely slow things down.
 
Someone told me for rec ground banks were asking for 8% and 30% down, can anyone confirm recent rec ground loans?
 
deerdown said:
Someone told me for rec ground banks were asking for 8% and 30% down, can anyone confirm recent rec ground loans?
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I wouldn’t be surprised at all.
If a guy is buying rec ground with no income & they don’t have a huge amount of equity in other areas- they are probably gonna be higher for rates since, by definition, those are riskier buyers from a banks point of view.
We are probably/likely likely looking at two .5 rate hikes & a .25. So- if a loan is 8% today, it’s heading towards 9.25% if we get those rate hikes. For ground with no income - that’s gonna slow it waaaayyyyy down. Even ground with income…. When it’s even 3% roi - these rates are going to be extremely impactful. There’s really zero possibility it doesnt soften & slow down even more. The cash buyers or guys who understand that there will be less buyers & it will be time to buy then…. They will find good solid buys coming up.
Folks that bought at peak of market & the small portion that has a life event where they need to sell…. They will lose some $.
BE CAUTIOUS WHEN OTHERS ARE GREEDY - BE GREEDY WHEN OTHERS ARE CAUTIOUS” or any variation of that. Which means: if it gets slow all the way to “ugly” coming up here…. When most folks aren’t buying…. That’s when a guy should buy if able.
 
Land prices continue to astonish me!!! I’ll admit- I thought it might slow down more than it has.
1) interest rates have slowed some buyers. No doubt. But there’s so much cash & little inventory it hasn’t been as impactful at slowing.
2) there’s been nothing to “spook buyers”. No big market drop. Or a real steady recession… YET!!!!!

As people keep paying some INSANE prices for ground with MINIMAL RETURN…. The piece of the pie I’m watching is those with debt on it. As much as there is cash buyers (always has been & always will be. A significant amount. & always be folks who pay their land off at some point) - there’s always a big chunk borrowing. At crazy prices- when there’s a recession….. they will need to get out of it. That slice of the pie is what will and always has corrected the market during a down turn.

I have no clue what’s gonna happen. A recession will come. When, dunno?!? U all still seeing whacky prices? There’s some where I truly believe they are way way overpaying….. this would especially be low or no income tracts. Others sell that I say “well, we did & do have crazy inflation to justify that one & is good income or long term investment there”. Thoughts? Crazy times!!!!
 
The inventory will have to shrink . Part of the problem is farmers and landowners do not want to sell! The alternative is the stock market (choppy) and bank CDs (boring)!

The PPP money was given to farms too …there’s not a lot of guys desperate right now.
 
Corn and soybeans are still high as well. If that changes (they drop)the land market changes .

We are in Jimmy Carter type inflationary times. Biden may have beat Jimmy in many inflation categories. It’s a disaster .
 
Sligh1 said:
As people keep paying some INSANE prices for ground with MINIMAL RETURN…. The piece of the pie I’m watching is those with debt on it. As much as there is cash buyers (always has been & always will be. A significant amount. & always be folks who pay their land off at some point) - there’s always a big chunk borrowing. At crazy prices- when there’s a recession….. they will need to get out of it. That slice of the pie is what will and always has corrected the market during a down turn.

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I talked to a big farmer yesterday, he said prices are crazy too, but he'd add on to his operation if the right piece (NW MO). Recently (within last 2 weeks) a 300+ acre piece sold near us for over asking price (7500/a), 2/3 of it bottom ground. A month ago he said some bottom near us sold for $10k an acre. That's the highest price I heard of in NW MO near us. He also stated that he'd rather pay $10k an acre for bottom ground than $4k for poor hill ground. He said he could never make the 4k ground pencil out even with these crop prices where at least he'd have a chance with the $10k bottom ground.

I talked to another big farmer in my area last week (he's the one who paid the $10k an acre for the bottom ground), he said he bought some bottom ground a couple weeks prior in another nearby county for $9k an acre. Apparently he's convinced land is still a good investment even at these prices.

That's kind of how it is at the time of purchase. You always wonder if you aren't paying a premium. I've only had 1 farm where I didn't have a gulp moment when buying a farm. But over the years, you look back and pat yourself on the back and see what a good investment you made.
 
deerdown said:
I talked to a big farmer yesterday, he said prices are crazy too, but he'd add on to his operation if the right piece (NW MO). Recently (within last 2 weeks) a 300+ acre piece sold near us for over asking price (7500/a), 2/3 of it bottom ground. A month ago he said some bottom near us sold for $10k an acre. That's the highest price I heard of in NW MO near us. He also stated that he'd rather pay $10k an acre for bottom ground than $4k for poor hill ground. He said he could never make the 4k ground pencil out even with these crop prices where at least he'd have a chance with the $10k bottom ground.

I talked to another big farmer in my area last week (he's the one who paid the $10k an acre for the bottom ground), he said he bought some bottom ground a couple weeks prior in another nearby county for $9k an acre. Apparently he's convinced land is still a good investment even at these prices.

That's kind of how it is at the time of purchase. You always wonder if you aren't paying a premium. I've only had 1 farm where I didn't have a gulp moment when buying a farm. But over the years, you look back and pat yourself on the back and see what a good investment you made.
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100% agree on this.
 
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