Land value chart over time for iowa...

[Sligh1]

Interesting for the land or financial nerds. Not really an insane amount of growth compared to other investments. We are still in a high period even though down a bit. Can also look at timber value from 2003 on. I clicked on inflation adjusted to see more accurate values. Another interesting point.... after the Great Depression- land values really didn’t tank badly. They went down, but not by a lot. Tons of interesting take aways and data in here depending on what parameters you look at.

Center for Agricultural and Rural Development

www.card.iastate.edu

 

[Hardwood11]

Really hot market right now. I remember reading an article about a guy from California that bought farms in Iowa for less than $1000/acre back in the 1980s. He loaded up.

 

[BJohnson]

Smaller parcels (100A or under) have really spiked up lately.

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[Sligh1]

Another interesting thing to ponder- just came to mind...
BOOM times... last 4 years.... ag ground has actually came down. Same with boom times after WWII- stayed flat. *possibly due to rising interest rates & strong dollar (harder on exports when dollar strong)

Major recessions of 2008 & 2001- ag land prices went up while most of economy cratered. Great Depression, again, lower but stable & didn’t crash like the economy did. *maybe due to lowering of interest rates.... 2001 recession would for sure have seen a weaker dollar which is good for exports.

Land crashed the worst in 80’s of course. Insanely high interest rates, high debt burdens & a fall off of high commodity prices.

Interest rates being high or low played role in lot of this. Same with value of the US dollar. I would say this is also followed to a lesser extent by: government subsidies, investors wanting out of stock market, export market, etc.
it’s an interesting market if one gets into studying it. Land market for sure isn’t for everyone. Many might make the case the stock market is historically better. Which if u only base it upon % increase in value over time- would be correct. More to it than that though. . In this environment we are in TODAY - dang would it make me nervous being all in on stocks. Comfortable on farm land even though it’s higher right now. No right or wrong answer - just interesting. Impossible to predict the future as well. Still go back to the old saying for anything “be cautious when others are greedy. Be greedy when others are cautious”.

 

[sep0667]

Smaller parcels (100A or under) have really spiked up lately.

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No doubt on that. Nearly everything I'm seeing is low 4k to even over 6k an acre for rough ground, 'hunting property'. Really sucks. I'm finally about in a position to buy something and its like all of a sudden in the past few months its seems the smaller properties the price has sky rocketed. Also, doesn't seem like there are as many listings lately either.

 

[Windlooker]

Buy when you can. It never goes down.

 

[BJohnson]

"Also, doesn't seem like there are as many listings lately either"

No doubt about it. Many more realtors now selling rec farms vs 5 yrs ago but listings also sure seem to be slowing.

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[Sligh1]

2 cents to new farm buyers..... wait til farm/planting season is underway and after. Market will slow. That’s IF things stay the same for market. Not up, not down. It’ll slow when planting starts. Folks who have stuff for sale now will reduce prices if their stuff isn’t moved by planting season. It’s always a lull in the market - may to July.

If hunting land continues to go bananas- I’d personally hold off. If/when economy tanks- rec land will go with it. Ag ground will not. So- I would try and buy a combo farm to insulate some. Some good income will be a good buy if get decent roi right now + historic low rates u need to lock in. Be patient but be fast when right deal surfaces.

 

[jlwdvm]

I purchased 100 acres 13 months ago and there were farms to choose from in the general area I was looking. A global pandemic hit and our economy came to a screetching halt....and then the rec land market went bonkers. I don't see prices getting better until the number of hunters drops, but you know what they say about opinions and buttholes!

 

[Tmayer13]

We are actually in the middle of a land purchase right now. Solely rec farm with ZERO income. The seller started off pretty high and several other potential buyers were turned off. We came in at what I thought was a little on the high side for a no income farm but I could also envision the potential. One thing that struck me was when the appraisal was done it actually came back at exactly what we paid, I felt this a little odd with it being a sole rec farm, but then it brought me to the realization of what land values are doing right now.

Be a damn good time to make some good money if you had farms purchased 5, 10, 15 years ago....a lot of money out there on the table. But the down side as others have mentioned is there is ZERO inventory right now to flip that cash into.

 

[Hardwood11]

We are actually in the middle of a land purchase right now. Solely rec farm with ZERO income. The seller started off pretty high and several other potential buyers were turned off. We came in at what I thought was a little on the high side for a no income farm but I could also envision the potential. One thing that struck me was when the appraisal was done it actually came back at exactly what we paid, I felt this a little odd with it being a sole rec farm, but then it brought me to the realization of what land values are doing right now.

Be a damn good time to make some good money if you had farms purchased 5, 10, 15 years ago....a lot of money out there on the table. But the down side as others have mentioned is there is ZERO inventory right now to flip that cash into.

That is common for the appraisal to match the sale price. I wish the appraiser didn't know the price, they often just match it, as long as it meets the sales price.

 

[sep0667]

What do you guys think the reason is that the inventory is so low right now? And will there be an uptick in listings soon?

Multiple times a week for nearly 10 years now I check listings on the known sites. It seemed like when I started doing that to just a couple years ago there was lots inventory, 40-100 acre pieces up for sale all the time and a steady flow of them. Now the past year and especially the past six months its just dead, not many listings. Maybe its just that I am now finally in the position to buy and I'm just waiting eagerly to see what gets listed, but seems like there use to be lots of options, but not the past several months.

 

[Farm boy]

Buy when you can. It never goes down.

Absolutely agree, you might have small fluctuations here and there but land will always be on the rise over time, they r not making any more of it.
If a persons dream and goal is to own land, you will figure it out if you want it bad enough.
Have patience, but when you find that piece that absolutely is what your looking for move on it don't be dickering over small amount of money just because you want too or think that it's say couple hundred dollars per acre to high.
Land is probably the best investment a person can make.
Lastly since skip mentioned the stock market in post no. 4 here is my 2 cent's it SCARES me right now.




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[Sligh1]

What do you guys think the reason is that the inventory is so low right now? And will there be an uptick in listings soon?

Multiple times a week for nearly 10 years now I check listings on the known sites. It seemed like when I started doing that to just a couple years ago there was lots inventory, 40-100 acre pieces up for sale all the time and a steady flow of them. Now the past year and especially the past six months its just dead, not many listings. Maybe its just that I am now finally in the position to buy and I'm just waiting eagerly to see what gets listed, but seems like there use to be lots of options, but not the past several months.

In short here’s why....
1) PPP funny money from government injected into the market like crazy!!!!! Lots. Well- billions or trillions.
2) interest rates took a 25% cut vs a year ago. Approx. A full percent makes a big difference!!! Record low rates right now.
3) folks got freaked out about the city riots & violence. Wanted out to the country. Folks also got freaked out about having $ in stock. Land diversifies it.
4) commodities are up so some folks thinking of selling decided to keep in turbulent times. Folks also reconsidered selling in terms of “if I sell, what investment do I feel safe putting it into?” That ? Kept some folks from selling.
5) common sense & obvious - just a lot more buyers than sellers. Some stuff doesn’t even make it to market. Solid buys get gobbled fast & right back off the market. Sellers market at the moment.
6) Inflation fears... Legitimate.... Land is a much safer investment during inflation.

Reasons IMO in a nutshell.

 

[hillrunner]

I wouldn't want to be sitting on a pile of cash right now watching it's buying power fizzle more every day. Dirt looks like a safer bet at the moment.

 

[meyeri]

Sligh your number one is why I am losing faith in the stock market. "1) PPP funny money from government injected into the market like crazy!!!!! Lots. Well- billions or trillions."

It's all a propped up system and they printed a ton of money through the pandemic to stimulate the economy. How long can a system like this sustain until people stop acknowledging that the dollar has no actual value? Are prices going up or is the value of the dollar dropping?
Now more than ever I am seeing the value of hard investments like real estate. You have something tangible if everything falls apart.

 

[hillrunner]

Sligh your number one is why I am losing faith in the stock market. "1) PPP funny money from government injected into the market like crazy!!!!! Lots. Well- billions or trillions."

It's all a propped up system and they printed a ton of money through the pandemic to stimulate the economy. How long can a system like this sustain until people stop acknowledging that the dollar has no actual value? Are prices going up or is the value of the dollar dropping?
Now more than ever I am seeing the value of hard investments like real estate. You have something tangible if everything falls apart.

You nailed it, how exciting will the government funny money be when a cheeseburger costs $100? The price of everything is screaming higher right now, wages included. I'm a general contractor and all I hear day after day from vendors is when their next price increase is. At the end of the day we will have gained nothing, we'll just have more dollars to deal with.

Land is about as safe of a place to park money as anything. I'm not sure if it's as great of an investment as it looks at times (especially when you figure in the interest and taxes paid along the way) but it's value will rise along with everything else where as money in the bank is losing value every day. I pick land over other investments because I get to enjoy it at the same time. Checking my stock portfolio isn't as fun as shed hunting!

 

[Hardwood11]

I heard a story this weekend of a guy that started a small auto business maybe one year before the Pandemic, and he got $63,000 in PPP money and then bought a giant boat that costs about $200 a day to run in gas.

Not sure how he qualified or many details, but that’s why it’s hard to find a boat, pontoon, ATV, fish house .. at a decent price.

Obviously some of that money went into land as well.

 

[Slick]

Getting PPP money is ridiculously easy.....especially the first round......All you had to do was prove you kept the same amount of employee's as when it started and you were in. So lets say you owned a convenient store or Grocery Store you did very well during the "crisis" and were given bonus money for keeping the employees you normally would have kept anyway. It was just gravy money for nothing. The ones I know about were substantially more than 63K.

Round 2 you just had to prove you had gross sales go down 25% for 1 quarter in 2020.............

I can't imagine what the next 1.9 trillion package will bring........we don't even need it!!!!!!!!!!!!! IMO Covid in in the rear view mirror at this point....

 

[deep woods goat hunter]

Be a damn good time to make some good money if you had farms purchased 5, 10, 15 years ago....a lot of money out there on the table. But the down side as others have mentioned is there is ZERO inventory right now to flip that cash into.

Good time indeed, though noteworthy to be aware of capital gains, with thin supply in market could be hard to 1031 into another farm.
I had a purchase contract contingent on the sale of my current farm at the time. Took a couple months, but got lucky and got my farm under contract before the new farm got snatched up by someone else. Closed on sale/purchase same day. Got very lucky but worked out great.


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