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Land Prices Out of Control

My first piece in Iowa was 800/ac (2002) and I had to think about it.My second adjoining piece was 1000 and my neighbor thought I was nuts. Lol. In fact he passed on both at 700 a couple years earlier.
 
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Thinkin Rut said:
Remember when you were jacked when mortgage rates went below 10%. That would be predatory lending today!
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In 1988 when we built our home interest was 10.5% and the would readjust every five years with a cap at 13%. Lucky after a few years we were able to do a fixed rate at 8% for 20 year note.
Man we thought we had the world by the tail!

In 1990 I could have bought junk land for 150$ in southern Iowa….. if only I could have afforded back then I’d be a land barren today….. oh well I owe nothing today and with the start of retirement after working hard and being smart about money it’s going to be good. Recreational land is IMO is a luxury and not a necessity in life. Farmland is a different animal. If you can afford it and not sacrifice things in life…. great otherwise save your money so you can afford it when you are able to buy.

I see it all over people buy land down south and living in a camper or a run down trailer home but by golly they own land… to each there own and I hope they can swing it
 
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Thinkin Rut said:
I think you'll have a stiff recession here shortly and circumstances will change.
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I'm no economics expert, but I did watch a video AND stayed at a Holiday Inn Express last night....so, darn near an expert. ;) ;) Kidding, just want to pick your brain a bit....


I don't see a recession coming for a few reasons.
Yes, the fed has increased interest rates a quarter of a percent, and is threatening to do that 6 times this year. This is an effort slow the economy a bit and to reel in inflation. I say big whoop. Inflation is running what....8-9%....but that's only for people who don't use food and fuel....but I digress.

So if inflation is at 9ish%, and lending is only around 4.5%, what's to slow the economy? Folks will just keep borrowing and buying because it's going to cost more tomorrow.

I also see the fed's actions as a bit of a window dressing. If they were to raise interest rates to match inflation, it would instantly cost close to a trillion a year just to service the national debt. (interest only!) Can't do that.

Given Ukraine's corn may not exist, Russian wheat unavailable, China's wheat crop terrible, and massively high cost and shortages of fertilizer, only direction food prices are going is up. When grain is high, land is high.

Add supply chain problems and high fuel prices, with no relief in sight due to Biden's refusal to drill, and you have a great formula for long term sustained inflation, along with high demand for goods and services.

Am I crazy? Your thoughts please!
 
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As you can see when interest rates went off the rails in the 80's land was hit pretty hard. Some people may extend themselves via credit in multipal ways like a House, Truck, Boat, and Land and have to unload something to keep the train rolling. I do think some correction will come at some point but if you intend on being in land for the long haul and you find the right piece buy it.
 
I've been following this page closely. It's been interesting with great insight and thoughts from many of you. Long story short working on closing on my first land purchase at the moment. Hopefully we made the right decision to jump now. We have been saving and looking for a long time and the way things are going I felt like the time was right to make the jump.
 
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Rec land & Ag land are quite different animals. They clearly mix when it’s “mixed rec & ag”.

But in simple terms… Rec land is tied to: the general economy & interest rates.
Ag land is clearly tied to commodity prices followed by interest rates & input costs.

When the economy tanks - rec land gets the ax for folks who are living too tight, lose their jobs, take pay cuts, etc. Rec might dial back or have a major correction- depends on economy. But to many, it’s a “luxury item”. Those types of items are first to go for many when it gets nasty.
Ag land stays strong even if economy reels back, as long as commodities are strong. On the flip side, when rec is booming/economy strong…. Ag could be slowing if commodities are down.
Most folks won’t need to sell or get in trouble on either side. But- it only takes 1-5% of folks to have issues to ripple through a market. Most people are fine & are not speculative buyers or investors. For shorter term investors, higher leveraged buyers or folks buying on a speculative whim- those are the folks who have a real chance of getting crushed coming up here. Dunno if/when but a correction to some degree is likely. IMO- on Ag & rec alike. Most folks who are responsible & careful can disregard & buy land & be fine - high or low prices in future. They don’t care. If u wonder about the future of prices at any level though, no one truly knows but it’s likely a good thought to be CAUTIOUS right now IMO.
 
There are several farms that have been sold to foreigners around the northern part of Illinois in the past. If one would look at the books at the courthouses, they would see that most of the land companies are from other countries. I have seen over 10,000 acres that is this way near me. The last farm that was sold went for over 10,00 @acre, and some went for way more than that. Offshore owners are from China, Taiwan, and Saudi Arabia, and are being run by farm managers.
 
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