Land prices / insane!!!

[Thinkin Rut]

With the limited land supply and REAL wealth created over the last 10 or 15 years, I'm guessing it will be more of a stealth correction with land prices staying at or near where we are right now for multiple years. It would take more than your average moderate recession to beat down the high land prices. A severe recession or depression might do it or incomes catching up to inflation might push it higher. No absolutes here except for very interesting times.

 

[Lucky 13]

Don't forget about all the city people wanting land in rural areas. Many aren't hunters they are just fleeing the cities. Especially those coming from the east and west coast. Selling a small house in a CA city will buy a lot in rural midwest.

Now add 250,000/month illegals flooding those cities and the burden that will place on cities. Many Urban schools are circling the drain, taxes are increasing rapidly and services and infrastructure are strained. The people with wealth are going to bail out in ever increasing numbers

Add to it that technology(starlink, solar, amazon) has made it way easier to live and work rural in the last 5 years. Also, as much as rural people hate the city slickers moving in, the added tax revenue of their new rural McMansions has definitely helped the revenue of many counties.

So my 2 cents is that it's gonna be a long long time before we see much of a reduction in land price.

 

[newfarmer]

Don't forget about all the city people wanting land in rural areas. Many aren't hunters they are just fleeing the cities. Especially those coming from the east and west coast. Selling a small house in a CA city will buy a lot in rural midwest.

Now add 250,000/month illegals flooding those cities and the burden that will place on cities. Many Urban schools are circling the drain, taxes are increasing rapidly and services and infrastructure are strained. The people with wealth are going to bail out in ever increasing numbers

Add to it that technology(starlink, solar, amazon) has made it way easier to live and work rural in the last 5 years. Also, as much as rural people hate the city slickers moving in, the added tax revenue of their new rural McMansions has definitely helped the revenue of many counties.

So my 2 cents is that it's gonna be a long long time before we see much of a reduction in land price.

Yes burying fiber optics everywhere in rural iowa sure is making things easier for folks. We have fiber from Omaha, to St Charles/truro, Des Moines, all the way up to Mason City to Cresco and ends in Ossian. We cover huge areas that never thought they’d get internet- and now they can work from home. You’d be shocked how many Californians we have moving to iowa, working from home and their work is still in California or Colorado (seem to be the main two) and they don’t miss a beat. Drawing large incomes yet while living here. I don’t know that we will ever see a dip in prices again

 

[Daver]

Yes burying fiber optics everywhere in rural iowa sure is making things easier for folks. We have fiber from Omaha, to St Charles/truro, Des Moines, all the way up to Mason City to Cresco and ends in Ossian. We cover huge areas that never thought they’d get internet- and now they can work from home. You’d be shocked how many Californians we have moving to iowa, working from home and their work is still in California or Colorado (seem to be the main two) and they don’t miss a beat. Drawing large incomes yet while living here. I don’t know that we will ever see a dip in prices again

I am unsure what the change in land valuations would be due to extended fiber, but I can say that we have fiber to our cabin now and we are in a pretty remote area. So you could definitely be on to something with that idea.

 

[newfarmer]

I am unsure what the change in land valuations would be due to extended fiber, but I can say that we have fiber to our cabin now and we are in a pretty remote area. So you could definitely be on to something with that idea.

We’ve heard its increased value of homes in town 5-7,000. And some rural places 10-12,000. But clearly not sure how it really is valued

 

[Jerry Gille]

My problem with all of this is that I am not that kind of guy who has $570,000 to buy 80 acres of non-income producing rec land. I'm also not that guy who would borrow that kind of money for rec ground. In fact, I don't have a single friend that is that kind of guy. We all run in different circles - often (but not always) based on the families we were born into. I simply don't run in those circles and my kind has been priced out of this market. That being said, I am always amazed at how much money is out there in so many hands. I have been at land auctions where I would bet I earn more (on paper) annually than all the good ole boys that are doing all the bidding and buying. Like others here, I don't expect much of a correction - if any due to buyers with enough resources and low inventory.

 

[Daver]

We’ve heard its increased value of homes in town 5-7,000. And some rural places 10-12,000. But clearly not sure how it really is valued

Noice! I really hadn't thought of that...but it makes sense, for sure.

 

[daniel93077]

My problem with all of this is that I am not that kind of guy who has $570,000 to buy 80 acres of non-income producing rec land. I'm also not that guy who would borrow that kind of money for rec ground. In fact, I don't have a single friend that is that kind of guy. We all run in different circles - often (but not always) based on the families we were born into. I simply don't run in those circles and my kind has been priced out of this market. That being said, I am always amazed at how much money is out there in so many hands. I have been at land auctions where I would bet I earn more (on paper) annually than all the good ole boys that are doing all the bidding and buying. Like others here, I don't expect much of a correction - if any due to buyers with enough resources and low inventory.

Totally understand where you are coming from. We have more household income than I ever dreamed and I can't say i'm priced out of a $570K property by any means. However, if I'm going to tie up that kind of cashflow towards a land payment. I gotta feel like I'm getting good value for my money and paying todays interest rates combined with todays prices just doesn't seem like a great long-term strategy. Bottom line, paying $600K in interest cost on a $430K at 8% or whatever on a loan over 15 years ($50K+ land payment each year) just isn't something I'm excited about stepping into. I'd much rather have that monthly cashflow freed up. Unless rates or prices drop significantly I can't see me making a land purchase using loans.

My strategy is to pay cash for smaller investment properties (or borrow if the property cash flows) and later 1031 exchange into land.

 

[JNRBRONC]

Yes burying fiber optics everywhere in rural iowa sure is making things easier for folks. We have fiber from Omaha, to St Charles/truro, Des Moines, all the way up to Mason City to Cresco and ends in Ossian. We cover huge areas that never thought they’d get internet- and now they can work from home. You’d be shocked how many Californians we have moving to iowa, working from home and their work is still in California or Colorado (seem to be the main two) and they don’t miss a beat. Drawing large incomes yet while living here. I don’t know that we will ever see a dip in prices again

Our son and his wife are thinking of moving back to Iowa, they have been living and working in the San Fransico Bay area. He's working remotely and has started discussions at work to be remote from Iowa.

 

[jflournoy]

I've been waiting 3 years for a correction. Not convinced it will ever happen in any meaningful way. Every new piece I see listed is sky high and eventually sells. Used to be able to buy most stuff privately. The influx of new real estate companies ans land agents in last 7 years is mind boggling. Has made that private aspect way more difficult.

But is it eventually selling at anything close to the sky high list price? My guess is in most cases no. Of course that's easy enough to find out for sure by checking assessor sites. Did the landowner get a higher sale price by listing it "sky high", or did he just watch his listing sit there for 6 months and ended up getting the same price it should have sold for anyway? Way more pieces of ground not moving right now in southern Iowa than are. It's a common misconception by many folks that by listing their land sky high, they can "settle" at a price that they actually wanted in the first place. That's a great theory and maybe it happens in a small minority of cases, but as a realtor/land agent myself I think what happens more often is buyers look at the high list price and decide not to even bother inquiring about the property or doing a showing because they think the landowner isn't really serious about selling, which in many cases seems to be true. As a listing agent I try not to take listings that are way above the market on price and won't sell, but as a buyers agent I have been on this side of the equation many times where I have a legit buyer who just won't even mess with inquiring about a property that is listed in the stratosphere price-wise. I think prices would have to moderate on rec or combo land in southern Iowa if there was a lot of inventory, but there isn't. And as long as there isn't, I doubt prices will moderate much if any. At the same time I'm not sure these inflated prices are sustainable. Part of the reason there is so little inventory is there are so many 1031 landowners/investors who look at the price-inflated market right now and can't reason out how it makes sense to sell high when they'll have to exchange at a high price as well. Then you've got a different kind of seller, the long-time Iowa resident landowner or farmer who is getting up there in age and really would like to sell but is petrified of the capital gains tax bill they will have. How to square the circle? What will break the logjam of low inventory on the market? I wish I knew the answer.

 

[jflournoy]

My problem with all of this is that I am not that kind of guy who has $570,000 to buy 80 acres of non-income producing rec land. I'm also not that guy who would borrow that kind of money for rec ground. In fact, I don't have a single friend that is that kind of guy. We all run in different circles - often (but not always) based on the families we were born into. I simply don't run in those circles and my kind has been priced out of this market. That being said, I am always amazed at how much money is out there in so many hands. I have been at land auctions where I would bet I earn more (on paper) annually than all the good ole boys that are doing all the bidding and buying. Like others here, I don't expect much of a correction - if any due to buyers with enough resources and low inventory.

There are a few pieces like this on the market right now in southern Iowa, but don't be fooled into thinking the sellers are going to walk away with anything close to that price on closing day. Not even 40's (which are in higher demand because more people can afford them) are going anywhere remotely that high unless they're in Warren or Madison or northern Marion or northern Clarke counties, good building site and an easy commute to Des Moines.

 

[tall@wide]

There are a few pieces like this on the market right now in southern Iowa, but don't be fooled into thinking the sellers are going to walk away with anything close to that price on closing day. Not even 40's (which are in higher demand because more people can afford them) are going anywhere remotely that high unless they're in Warren or Madison or northern Marion or northern Clarke counties, good building site and an easy commute to Des Moines.

Recently, I scheduled to go look at an 80 acre piece for sale by owner in Southern Iowa. Priced high and no income but looked like a great hunting tract. The owner called me after I scheduled to look at and said someone just paid full price and bought it without even looking at it. So, there is still plenty of money out there to buy land at current prices. If a top notch hunting farm goes on the market, it will sell.

 

[jflournoy]

Recently, I scheduled to go look at an 80 acre piece for sale by owner in Southern Iowa. Priced high and no income but looked like a great hunting tract. The owner called me after I scheduled to look at and said someone just paid full price and bought it without even looking at it. So, there is still plenty of money out there to buy land at current prices. If a top notch hunting farm goes on the market, it will sell.

Lots of variables and it certainly does happen even in the current market that buyers reach for something at an above market price, though you didn't mention what was "high". Right now it is definitely the exception rather than the rule, though. There are plenty of cash buyers out there still no doubt, though a lot of financed buyers are sitting on the sidelines right now with interest rates where they're at. But most of the cash buyers didn't get into that financial position by making a habit of overpaying for stuff. Lots of cash buyers right now "keeping their powder dry" to try and pick up some deals if prices moderate a little bit. Price still matters, even on top notch hunting farms and even to cash buyers who can easily "afford" to pay much higher prices.

 

[Windlooker]

I’m in southern Iowa. Three pieces this past summer , a 130, 110, and an 80 , were listed by the Iowa Land Company for a high price. All three sold in a week for asking. One bordered me and two others were across the road. The 110 was purchased without seeing it as he lost other properties in the negotiation process when others paid asking. There’s money out there and people are paying.

 

[tall@wide]

Lots of variables and it certainly does happen even in the current market that buyers reach for something at an above market price, though you didn't mention what was "high". Right now it is definitely the exception rather than the rule, though. There are plenty of cash buyers out there still no doubt, though a lot of financed buyers are sitting on the sidelines right now with interest rates where they're at. But most of the cash buyers didn't get into that financial position by making a habit of overpaying for stuff. Lots of cash buyers right now "keeping their powder dry" to try and pick up some deals if prices moderate a little bit. Price still matters, even on top notch hunting farms and even to cash buyers who can easily "afford" to pay much higher prices.

$495,000

 

[jflournoy]

$495,000

Depending on *where* in southern Iowa, that is high for sure but there are pieces listed a lot higher. I saw a raw land 80 (small amount of crp income) listing that had a "price improvement" the other day. It has been listed for months already. The "improved" price: $8k/acre! That is pure insanity. It's going to be sitting for quite a few more months if they stay at anything close to that price. There were decent quality southern Iowa 90% tillable farms in 2023 that sold for nowhere near that kind of price.

 

[Lucky 13]

IMO- if you can buy now you SHOULD. Beg, borrow, leverage. Whatever it takes. Just don't be silly with too much risk. Understand the investment and not just the price.

Most likely there is NO correction coming that will have a large enough impact to make a deal great. Yep, interest rates are a little high but not wildly out of historical norms. The Fed has already said they are planning 3 rate cuts next year so you can always refi to a better rate. In another 10 years you will be saying, "Dang, I wish I would have bought xyz property back in 2024 when land was cheap!".....and you will still be waiting on the "Big Correction" that never comes.

Owning land pays you 3 ways
1. You make money on the appreciation- recently 10-15% per year
2. You make money from rents or crp- 2-5%
3. You make money with tax write off- another couple percent- get a good CPA
Bonus #4 if you work on the land (fixing fence, tsi, food plots, clearing invasives), you get better health and happiness

I bought my first piece of land 8 years ago. It was just 80 acres and I paid $3500/acre. Every single person I knew and didn't know said I paid WAY TOO MUCH. Family and friends openly mocked my purchase. Well, today I could sell it easily for $6k/acre, made $56k in CRP, and tens of thousands in tax deductions.. And the haters are still sitting on the sidelines waiting for a "correction". I have since paid off that property and used it as leverage to purchase 2 other properties that are also providing income and asset increases. Additionally, inflation is actually your friend with the more land/properties you own.

Lastly, we desperatlely need more hunters being land owners.

 

[Thinkin Rut]

Lastly, we desperatlely need more hunters being land owners.

I want to be surrounded by animal rights people coming in from the left coasts!

 

[MarkF]

I want to be surrounded by animal rights people coming in from the left coasts!

Same with me, every farm around me that gets sold to hunters is actually making the hunting way worse. Seems really bad now as guys are paying so much for the land that they are doing dumb things like selling hunts to offset the mortgage, my advice would be to only buy something that you can afford without added income from the farm itself, crp and rental rates change.I’ve seen guys in really bad spots when they find out their crp is going from $280 an acre to $190. Worst neighbors you can have are guys that are cheap and only concerned about money.

 

[Lucky 13]

I want to be surrounded by animal rights people coming in from the left coasts!

Same with me, every farm around me that gets sold to hunters is actually making the hunting way worse. Seems really bad now as guys are paying so much for the land that they are doing dumb things like selling hunts to offset the mortgage, my advice would be to only buy something that you can afford without added income from the farm itself, crp and rental rates change.I’ve seen guys in really bad spots when they find out their crp is going from $280 an acre to $190. Worst neighbors you can have are guys that are cheap and only concerned about money.

Meh, there are a million anecdotal bad scenarios why not to do something. Hunt clubs, amish, tree huggers, peta freaks, bad hunters, disease, etc. At the end of the day a guy either has to make a decision to go for it or just keep sitting on the sidelines wishing and hoping and then making excuses as to why the good deal slipped away.

I've never met someone who said, "Darn I wish I hadn't bought my hunting property 10 years ago when it was 50% less than today".