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Land prices / insane!!!

If you have cash and want to park it somewhere and earn a GREAT rate of return and its bullet proof buy I-bonds. Currently at 9.62% and will be similar on the next 6 month calculation in Nov. Have to keep it there for 1 year then you can pull out if you want you only lose the last 3 months of interest. Down side is only 10k per person per year. Lots of ways around that. Buy them for yourself, Wife, Kids, your Business is eligible, if you have trusts, LLC's, Corps, they are good for 10k as well. Then on 1-1-23 you can buy another round of 10k for each of the entities you used. So in my case I bought 50k with family and another 10k with the LLC I have some land in for a total of 60k. Then on 1-1-23 I can buy another 60k for fam and LLC. Good place to go right now.

I bonds — TreasuryDirect

www.treasurydirect.gov www.treasurydirect.gov
 
I think land has softened a little recently. A good recreational piece thats secluded. And has a good history is still going to bring good money.
Several Low to Mid 70s CSRs unimproved(untiled) tillable tracts are still bringing right at 10k. Which I would say is down some.

And then you have the anomaly of the 80-120 acres that's is in the middle of 2 well off neighbors that brings big bucks. But I would said those are far and few.
 
Watch the market in the next year, things could really shift. Several factors...interest rates, less cash available, and the stock market has dropped and is very choppy right now. Corn/Soybean prices are still high and that has helped keep land up.

Times could be a changin!
 
Hardwood11 said:
Watch the market in the next year, things could really shift. Several factors...interest rates, less cash available, and the stock market has dropped and is very choppy right now. Corn/Soybean prices are still high and that has helped keep land up.

Times could be a changin!
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Agree 100%. Just on “what we expect”…. We gonna be in 6-7% interest rates pretty quick here. (Was 3 to 4.5% 18 months ago). Recession looking deeper. Dow continues to get rocked. Ag prices stay high & stable at that high rate…. But it’s not minor on how fast Input costs chase those prices & go up to eat at profits. Add to it a mixed bag on yields…. Few regions of farmers gonna have a rough year.
Is it “doom & gloom”? No. Should an able dude buy “the right farm in the budget”? YES. But…. 1000% agree…. Times are changing fast. Likely just a healthy slow down. IF IF IF we have another major curveball thrown in this mix- that’s when it gets bad & messy.
Just wanted to remind all u Biden voters (mainly the dead ones)…. Things are going REALLY WELL!!!! :cool::p:D:rolleyes:o_O;)
 
It's unbelievable what they are still asking for some of these rec tracts in Illinois (and Iowa). The amazing part is people are still buying them. I made an offer a couple days ago on an all wooded tract with no income and timber had been thinned a few years ago. They declined and listed it with an agent. I know they are asking too much, but it will be sold within a couple of weeks I'm betting.
 
tall@wide said:
It's unbelievable what they are still asking for some of these rec tracts in Illinois (and Iowa). The amazing part is people are still buying them. I made an offer a couple days ago on an all wooded tract with no income and timber had been thinned a few years ago. They declined and listed it with an agent. I know they are asking too much, but it will be sold within a couple of weeks I'm betting.
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A big issue is a lot of folks are pulling $ out of the stock market and looking to put it somewhere more stable. I think I mentioned it here, earlier this year I put a full price offer on a property within in 2 hours of it going up for sale, and they decided to take it to a bidding war. I told them no thanks, I offered exactly what you asked for the first time. Again, IMO I was up against the same issue of $$ coming out of the stock market.

Next year is setting up to be a lot different than this year.
 
tall@wide said:
It's unbelievable what they are still asking for some of these rec tracts in Illinois (and Iowa). The amazing part is people are still buying them. I made an offer a couple days ago on an all wooded tract with no income and timber had been thinned a few years ago. They declined and listed it with an agent. I know they are asking too much, but it will be sold within a couple of weeks I'm betting.
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This farm went into a bidding war the day after it was listed. It sold for at least $500 acre more than the list price. Someone paid way too much IMO.
 
Sligh1 said:
BINGO!
I’ll do something rare!!! ;). Give my 2 cents in 2 lines….
2021 & 2022 will be remembered as a SELLERS MARKET…. 2023 will be a BUYERS MARKET!!!
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I agree. The Fed announced another rate hike with several more projected over the next 6 months. Instead of cutting back on free money, politicians continue to give it out in different forms (and printing it) and can't understand why inflation continues. Consumers are punished by the Fed for doing what they should be doing which is transferring currency from one business to another to keep the economy running. These rate hikes are going to get people to stop that velocity of money and hold on to it. I know some feel we're in a recession and technically we are but I think we're more on the edge but with continued rate hikes by the Fed it will push us deeper into recession territory and people are going to feel it more than they do now. The people who have pulled their money out of the market and put it in land have likely already done so which will result in fewer buyers which I don't think will support the current asking prices. I think the question becomes how long will it stay a buyer's market once the tide turns which seems to be closer every day.
 
Talking to a young guy today discussing loose basic math… him saving for a piece of land in Midwest.., Say a guy paid interest on “$300k” (whatever, just making this up)…. Say he could have got a loan for 3.5% interest a year ago. For ease of conversation, let’s say it’s 7% after todays 5th or 6th (whatever) rate hike….

Yearly simple interest obviously: $10,500 on the 3.5 or $875/month.
Now it’s $21,000 on the 7% interest or $1,750 a month.
These are just rough figures on a made up example. But- on a “middle income buyer” - this is a HUUUUGGGGEEEE game changer. That’s a big deal!!!! IMO - this just took well over 50% of finance buyers out of the market.
 
I agree with the consensus here so far but the rec ground inventory just remains so low around me and I have to wonder how that will factor in too. Of course inventory has been low for years as far as I can tell too.
 
I think most fail to recognize what rec ground out east has been selling for, as I thought I heard PA ground has been over $10K/acre for at least a decade. Seems that $10/K for Iowa ground, with the deer here, is a steal for some people. We are in a global economy, China is buying ground here. :(


Sent from my iPhone using Tapatalk
 
Sligh1 said:
Talking to a young guy today discussing loose basic math… him saving for a piece of land in Midwest.., Say a guy paid interest on “$300k” (whatever, just making this up)…. Say he could have got a loan for 3.5% interest a year ago. For ease of conversation, let’s say it’s 7% after todays 5th or 6th (whatever) rate hike….

Yearly simple interest obviously: $10,500 on the 3.5 or $875/month.
Now it’s $21,000 on the 7% interest or $1,750 a month.
These are just rough figures on a made up example. But- on a “middle income buyer” - this is a HUUUUGGGGEEEE game changer. That’s a big deal!!!! IMO - this just took well over 50% of finance buyers out of the market.
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This is one thing people don't really consider as close as they should when buying land. I've seen people buying a farm and they finance most of it. They say it's a great investment, and I say have you looked to see exactly how much you are paying in interest every month? They always say no, not the exact amount. Interest will eat your investment up and make it a bad investment in most cases. I really think in most cases buying land is only a great investment when you pay cash for it. Some exceptions are if you keep it for a long time and pay it off early, or you buy it to sell it right away.
 
tall@wide said:
This is one thing people don't really consider as close as they should when buying land. I've seen people buying a farm and they finance most of it. They say it's a great investment, and I say have you looked to see exactly how much you are paying in interest every month? They always say no, not the exact amount. Interest will eat your investment up and make it a bad investment in most cases. I really think in most cases buying land is only a great investment when you pay cash for it. Some exceptions are if you keep it for a long time and pay it off early, or you buy it to sell it right away.
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I don't necessarily agree with that. Appreciation has to go into the formula and the tax benefits. The interest is fully tax deductible. I do agree with your point that people to weigh and understand all factors.
 
IowaBowHunter1983 said:
I don't necessarily agree with that. Appreciation has to go into the formula and the tax benefits. The interest is fully tax deductible. I do agree with your point that people to weigh and understand all factors.
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I see what you are saying, but you only get a small percentage in interest paid back when you deduct it on your taxes. It's not like you are getting a full refund for it. Also, in Skip's example he used 7% and if that is over 30 years, it's around $420,000 paid in interest alone.
 
tall@wide said:
I see what you are saying, but you only get a small percentage in interest paid back when you deduct it on your taxes. It's not like you are getting a full refund for it. Also, in Skip's example he used 7% and if that is over 30 years, it's around $420,000 paid in interest alone.
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For investment - a guy really needs to buy “a deal” where he can buy it 10-20% below market BECAUSE it needs work. Do the work yourself where it’s mainly labor/time.
The one “good part” of guys paying interest on land (& I agree- it’s a huuuuuggggggeee amount of $ )….. it’s almost like “forced savings” for folks. They pay interest with equity… 90% of people out there IMO- will blow the $ on stupid crap (vehicles, trips, bigger houses, more “stuff”) if they don’t have the forced payment when their income can support it. That’s the one silver lining to dudes that scrape by to buy land vs the same “other guy” that doesn’t do it & pisses the $ away.
For cash buyers… this next year will be very appealing & rewarding. & ya, probably be wise if a guy can get a steal, finance & weather some tough times. These might be the times when “no one wants to buy” - which generally means that’s the best time to buy!!
 
tall@wide said:
I see what you are saying, but you only get a small percentage in interest paid back when you deduct it on your taxes. It's not like you are getting a full refund for it. Also, in Skip's example he used 7% and if that is over 30 years, it's around $420,000 paid in interest alone.
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I am all for being conservative. I am a conservative investor. And I've financed some portion of every single real estate transaction for exactly the last 20 years. People need to understand what they are doing, need a good tax strategy, and a good CPA.
 
Sligh1 said:
Talking to a young guy today discussing loose basic math… him saving for a piece of land in Midwest.., Say a guy paid interest on “$300k” (whatever, just making this up)…. Say he could have got a loan for 3.5% interest a year ago. For ease of conversation, let’s say it’s 7% after todays 5th or 6th (whatever) rate hike….

Yearly simple interest obviously: $10,500 on the 3.5 or $875/month.
Now it’s $21,000 on the 7% interest or $1,750 a month.
These are just rough figures on a made up example. But- on a “middle income buyer” - this is a HUUUUGGGGEEEE game changer. That’s a big deal!!!! IMO - this just took well over 50% of finance buyers out of the market.
Click to expand...

Agree for sure. I watch listings daily, usually i just pay attention to the 50-100 acre size. Any piece of 80 acres give or take a few seems to still be asking more than just a few months ago, most around 500k. But there is no doubt the bump in rates has taken huge chunk of buyers out of the market. I think we are going to start seeing listings sit for a while now, and soon may see prices start to drop. I think any motivated seller is going to have to start dropping the price.
 
sep0667 said:
Agree for sure. I watch listings daily, usually i just pay attention to the 50-100 acre size. Any piece of 80 acres give or take a few seems to still be asking more than just a few months ago, most around 500k. But there is no doubt the bump in rates has taken huge chunk of buyers out of the market. I think we are going to start seeing listings sit for a while now, and soon may see prices start to drop. I think any motivated seller is going to have to start dropping the price.
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I agree, unless it's a top notch hunting farm. Then a cash buyer will come in and buy it immediately.
 
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