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Land prices / insane!!!

Prices will not correct by much as long as there are more buyers than sellers because of low inventory, and that is exactly the situation still in southern Iowa. Look across the border in northern Missouri and there are a lot more properties for sale. Demand isn't as high. In my opinion, prices are likely to correct sooner and further in northern Missouri than southern Iowa.
 
I’ll say the obvious …. Demand is still pretty stout. Especially on say, <100 acres or on high end tillable. IMO- things have softened on others. Inventory is tight. Interest rates have slowed it but we have not had anything to “spook” buyers yet…. “RECESSION” or a major drop in stock market where 20%-30% of the wealth gets wiped out. It’s dropped but not near to that degree & the ripples of massive PPP $ still flood wealthy pockets.

If any one or even myself was to say “it’s about to go down”….. I might be wrong 15 times but the 16th time I might be right. So take those types of advice for what they are worth. Yet, we do know It’s gonna happen- just “when”????!!?. & I don’t mean “collapse” but a reverse of this crazy market will come. It will. When & to what degree?!? No clue. IMO or my gut……. I kinda think 2023 does end with some major drops. As in, recession of folks market wealth taking a 20% hit for example. Maybe wrong. Heck, I’m probably wrong. But, my best guess…. Or what I’m personally preparing for is just that…. A significant slow down in 2023 or 2024 (on rec or mixed type land). That’s what I’d bet on if I had a 100 bill at a casino & this would be one time I think I have the edge & odds stacked in my favor “betting”. Maybe I’m wrong but that’s my “planning”. I personally see too many unhealthy purchases that are signs a bubble is forming & could burst.

For a new buyer: I’d still buy TOMORROW if u find right tract at right price. As long as you can & will weather tough times if they come.
 
So if you had an opportunity to buy the great neighbor's riverbottom ground and prevent a new potential rotten neighbor for $3k/acre would you do it?
 
As interest rates climb and the stock market corrects, rec land has always decreased in my lifetime. As commodities drop and interest rates increase ag land has also dropped. In the 80's, I remember several farmers buying ag ground for $3500 an acre, thinking there was no end to overpriced land and six months later you could have bought the same farm for $700 an acre. It put some out of business and set others back for years. My personal opinion is not whether these things will happen, it's when and how much.
 
kelcher said:
So if you had an opportunity to buy the great neighbor's riverbottom ground and prevent a new potential rotten neighbor for $3k/acre would you do it?
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Anyone who answers honestly says yes. :). Anyone who’s looked at land prices is also probably buying it over the phone too ;).

It’s a myth that ground prices always go up. Trophybluf above is spot on.
Rec ground rises & retreats with the economy. A lot of guys have lost money when they needed to sell in a down market. Housing, land, real estate in general. & yes, farmers who got aggressive in 2012-2013…. When commodities dropped in HALF in 2015-ish…, the portion of guys who couldn’t handle the losses - lost their butts. Lost $ on land. Saw it all over. Didn’t see it a lot in N iowa but a bit. Southern 1/3rd of state - absolutely. It’s always a portion of the pie that gets in trouble. In any market. Guys who pay cash or hang on will always be fine of course. But those with a lot of debt & declining incomes- the storm always comes. Echo above- u just don’t know when.
This discussion & cycle literally could go back to biblical days of years of feast & then famine. The ups & downs of agriculture, cattle, etc…. Input costs, droughts, floods, low commodity prices…. On & on…. Why most smart farmers set stuff aside when they have “3 good years” (if they do) …. Cause I assure u- the years of NO PROFIT & LOSING $ do happen on the average farms. Maybe not the top tier with thousands of paid off acres. But the majority - tough years come. Human nature in that some prepare, some don’t. Always has been that way, always will b that way. Same with BUBBLES, people paying crazy prices, recessions, greed, etc- these things will always come & go. For the health of the market - we are due for a dip. When this storm comes!?!???…. Who knows. I’m ok with it & I never want to discourage land ownership (DO IT!!!) …. But I assure u- the storm will come.
 
treerat said:
I watched recreational land in NE Iowa go from 5k an acre to 10k almost overnight. Seriously considering selling some land and banking half the proceeds to buy another farm in another area when the recession hits. I am crazy or no?

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You'd look like a genius if it works but trying to time the market like that is risky business. You could easily end up on the outside looking in. Also need to consider the tax implications of it all.
 
treerat said:
I watched recreational land in NE Iowa go from 5k an acre to 10k almost overnight. Seriously considering selling some land and banking half the proceeds to buy another farm in another area when the recession hits. I am crazy or no?

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I think you could find a farm for 5k acre, slightly more. If you are open to a new location.
 
THIS is what we call a “bubble” folks. Above selling for $8200?!? Good gosh.
treerat said:
I watched recreational land in NE Iowa go from 5k an acre to 10k almost overnight. Seriously considering selling some land and banking half the proceeds to buy another farm in another area when the recession hits. I am crazy or no?

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I would. $10k?!?! I’m a SELLER!!!! If I’m not married to that area. Like above says- $5k will buy u great hunting land. $10k - people out of their minds.

Do I know what’s gonna happen? Course not!!! But- if u ever could describe a BUBBLE- this is one in the making. SOME people have lost their minds!!!! One just sold by me for $7600… no income. No marketable timber. I wouldn’t say it’s crazy for big deer either. Think the dude gonna be disappointed & will sell- if/when he decides to sell…. If he needs to & this market retreats- yikes!!!!
All we need is an “event” to pop this bubble at this point. One “big thing”. For example…. Let’s say these bank failures keep getting worse. & rates keep going up as well. IF something like that happens… POP!!!! & I hate to say it (kinda ;) ) …. This needs to happen. We need a correction desperately at this point. For health of market we need a correction or slow down.
 
Jerry Gille said:
40 acres in west central Illinois brought $8200 an acre today. There seems to be no slow down in site. That place would have been $3700 tops 3 or so years ago.
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I've been getting some crazy offers for my farm in Illinois, but I cannot find anything reasonable to 1031 exchange into... Insane what people are willing to pay right now!
 
I personally think the less than 100 acre farms (tillable or no tillable) high prices are here to stay, especially anything 40 acres or less. There are more people that have cash (from no longer wanting it in the market) and want to own dirt. not even for hunting or farming, but to own land, or to live on or what ever the reason. And I dont think many of them look at the "per acre" cost. I know many that have "X" amount of liquid, and they have simply looked for a piece that falls in line with that budget and buys it.

If I owned a large parcel that had lots of access points along roads, I would log it and then be breaking that up into small parcels in a heart beat to list. woulda coulda shoulda bought in a 30 mile bubble of the DSM metro years ago.
 
People are trying to cash in before anything "pops" at this point too. I saw a guy post his landlocked (by public) river bottom 50 ac or something in that ballpark. Handshake deal with the DNR for equipment access. No income. Surrounded by public on 2/3 and a river on 1/3. Asking $6500 and nearly a 65% increase since he bought in 2020...yikes.
 
BDAHMS said:
I personally think the less than 100 acre farms (tillable or no tillable) high prices are here to stay, especially anything 40 acres or less. There are more people that have cash (from no longer wanting it in the market) and want to own dirt. not even for hunting or farming, but to own land, or to live on or what ever the reason. And I dont think many of them look at the "per acre" cost. I know many that have "X" amount of liquid, and they have simply looked for a piece that falls in line with that budget and buys it.

If I owned a large parcel that had lots of access points along roads, I would log it and then be breaking that up into small parcels in a heart beat to list. woulda coulda shoulda bought in a 30 mile bubble of the DSM metro years ago.
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This will reverse at some point.
Right now LOTS of guys are buying land with debt on ground spitting out NEGATIVE to 1-2% ROI. With 7%++ interest rates. New buyers and guys who didn’t understand land - they have a wake up call with all the responsibility with land. Or “oh, there’s not 2 booners on the farm every year?!?!????!” “Taxes are a lot”. Whatever. The dudes that paid way too much…. Just like in 2007 or countless other times…. A certain % will need to sell at some point …. Likely at a point when the economy contracts. Wealth gets wiped out. It might take some time but it will happen. Recession will come. Wealth will get scalped/trimmed (like if Dow goes way down for example). All this cash will make its way to the wealthy & to pockets that stop spending. This will slow. & dudes that bought “$10k big buck hunting” or “$8200 hunting land with one tiny access point” - they won’t be able to get it.
I would buy a solid farm TODAY if u able. 1000%. Way overpaying & debt on top of it- some of these folks are gonna get in big trouble. Guys who bought at peak in 2007 & then again in 2013…. Both those highs got followed by big drops that took some dudes out. $ lost. If they needed to sell. We are going down same path IMO.

I absolutely agree with ur post…. 40 to 100 acre parcels are always gonna be big demand & marketable. (Unless u pay way more than worth which is happening). Long term- awesome investments!
 
The all timber and rec parcels will correct down… just don’t get caught with high loans and no income !!

Farm land may go down as well or simply stay the same, but that could take a drop in corn & soybeans. Higher interest has to have impact eventually.

It’s makes no sense. History says it will correct downward .
 
My buddy and I are going to eventually sell our farms west of Des Moines and try and buy one big continuous piece probably somewhere in the southern half of the state where we can get into some bigger tracts of timber. Right now the numbers don’t add up. Those rec farms in southern Iowa are still at 6k an acre with little to no return. My hope is those get corrected and our farms continue to appreciate the further west they build out from the city.
 
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