Land Prices 2009?

[Brahma Bull]

Watching the Nightly News on the current situation here in America.Then looking at the listing prices on farmes and ranches 300 to 1,000+ acres.Some asking $3000 to $4000+ per acre.Wonder if the same will happen to land prices as the housing market,price of gas and price on new pickups.They say it will be a long hard road ahead.It is plain crazy asking $3000 to $4000 per acre now.Lot of Luck selling at those prices now.$900 per acre sure be nice.But who knows what the future will bring in the coming years.Glad my farm is paid for.

 

[hillrancher]

Land prices here have hit a level plane not going up. Your land is cheap as to our hills and rocks. There was 320 sold on court house step two weeks ago 960 per acre sold for opening bid. This is out and no building on it. This is the cheapest I have seen sell in last 8 years. We are at or over 3,000.00 per acre on large or small acreages.

 

[dun]

The only catch to land prices going down is that some folks paid too much for them and are unwilling to sell them for what they're actaully worth.

 

[Jim62]

But, that's always the catch to speculating--sometimes you win, sometimes you lose. Now that I think about it, that's probably a big part of what got us to where we are today.

 

[Jogeephus]

People and lending institutions will try to hold land prices where they are as these higher prices are the basis for collateral on other loans. However, some people are needing to get liquid for various reasons and will end up putting some on the market without a minimum. Last month I did some field work on a land deal where 300 acres went for $1500/acre. Of this $600/acre was timber value and due to the housing market the primary products were depressed considerably. I'm working on another 490 acre lot that will auction this month. This land has developemental potential, cultivated lands, and a lake. (this is one of those places I predicted would be sold when hard times came due to mismanagement) The auctioneer has lied in his brochure twice and assuming people don't bite on this misinformation, this sale will give a good idea of whats going on with land prices.

 

[Brahma Bull]

Everything is too high price.So now the market is correcting itself.It can't support those high pricetags for any long period of time.As one realtor told me the land prices and wages need to be cut by 50%.Make things more competetive.Lucky will be the ones who got extra cash stashed away to take advantage of the cheap prices and labor.Perhaps cattle prices and feed prices will be next to drop.
Will be a buyers market.

 

[Alberta farmer]

Land prices in Alberta are still going up. Don't know if that will hold with the drop in oil prices or not? A local real estate guy says houses have dropped off a bit but not rural properties.
I guess it depends a lot on where the economy is going. Interest rates are pretty low and getting lower. If OPEC drives the price of oil back up to over $75/bl land will probably continue to rise around here.
My neighbor figures this is the time to buy! He figures if you can lock in a cheap interest rate, in a short time inflation is going to take off,due to all the money the US government has pumped into the system? He thinks inflation is going to be unreal and land prices will rise in a major way! Don't know if he is right or not?
I sometimes wonder if this economic mess is out of control and they whole world might go in the tank?

 

[bandit80]

If you are wanting to buy land, just hold off a coupe of years. The prices raced up too high, and there will be a correction. Probably not back to where they were 15-20 years ago, but much lower than today.

DISCLAIMER: The above is my opinion entirely, not someone else's. If in 2 years land prices have double again, I'm sorry.

 

[houstoncutter]

I worry about a massive land devaluation... As more baby boomers retire they will no longer need a tax dodge, and with a poor economy less young folks will be looking for large tracts of land to buy... Sounds like the beginning of a real $hit storm

 

[backhoeboogie]

Some asking $3000 to $4000+ per acre.

$900 per acre sure be nice.

If I could buy any of the places next door for $4000 an acre, I'd drain all my accounts immediately.

Why wish for $900? If we are wishing, lets get back to $50. Naw. On second thought, that wouldn't be good. I'd wreck out the truck and maybe kill myself getting there as fast as I could.

 

[Brandonm22]

I am starting to see some $900, $800, and $700 an acre stuff starting too pop up on the market. There were 500 acres in Miss at $700/acre in the Bham news just a few weeks ago. Not a lot but a whole lot more tracts than we had six months ago. Most of it is cutover timberland in West Alabama or in Mississippi. I figure those are folks looking for cash now (for whatever reason). Soterra is unloading a lot of timberland at $1500 to $1900 an acre. IF we are entering a protracted recession/depression we are going to see prices come down because too many people are losing their jobs and their financial investments to keep holding on to land. The Boomers also hold a whole lot of land (and most are JUST holding it) and as they increasingly approach retirement and/or death those assets are likely to be liquidated.

The 800 lb gorilla is Fed money policy. Are they going to let all those debts unwind and let all these millions of homeowners go underwater and take the auto industry and numerous other corps with them OR are they going to hyperinflate the economy so that home values rise above the current payoff??? IF they hyperinflate, land prices (and everything else including wages) are going up as the dollar's value declines. My gut reaction is to get bullish on land and say buy, buy, buy; but I can certainly see how the other could happen too (especially short term). At this point, the buy, sell, or hold position on any investments is pretty much just high stakes gambling.

 

[skyline]

I found this intesting.... Times are changing for sure.

RURAL LAND LOSING LUSTER
PALESTINE (Fort Worth Star-Telegram) – Until recently, investors looking for land poured money into just about every corner of Texas. But with the stock market in a free fall, the state's land boom has begun slowing.
The volume of sales of rural property in Texas fell 31 percent in third quarter 2008, said Dr. Charles Gilliland, research economist with the Real Estate Center at Texas A&M University. And he said land values are not increasing as they have in the past.
"The price increase has fallen substantially from what it was a year ago," Gilliland said. "In 2007, there was a 20 percent increase over 2006. It's just speculation at this point, but I wouldn't be surprised if we're pretty flat in the fourth quarter or just up about 5 percent from a year ago."

 

[Brahma Bull]

I just called a realty co. about 770 ranch in Altair Texas I saw for sale months ago.It was sold at $4000 per acre.I figure someone with a big chunk of money bought it,would pay anything to get it.Sell San Antonio water or put up game fence or gravel pit or just a cattle ranch?Who knows.But that is what got us in the mess we are in today.Makes it so the average guy can't afford buy a farm or ranch with crazy prices.Trying to guess the markets which way things might go is same as playing in Vegas right now is my gut feeling.We can always regret we didn't buy,buy,buy but on other hand.You might really regret if things go sour.I can't see how much more water this ship can take on.Like prices on Muscle Cars,a certain point you say it is plain insane.

 

[HerefordSire]

I found this intesting.... Times are changing for sure.

RURAL LAND LOSING LUSTER
PALESTINE (Fort Worth Star-Telegram) – Until recently, investors looking for land poured money into just about every corner of Texas. But with the stock market in a free fall, the state's land boom has begun slowing.
The volume of sales of rural property in Texas fell 31 percent in third quarter 2008, said Dr. Charles Gilliland, research economist with the Real Estate Center at Texas A&M University. And he said land values are not increasing as they have in the past.
"The price increase has fallen substantially from what it was a year ago," Gilliland said. "In 2007, there was a 20 percent increase over 2006. It's just speculation at this point, but I wouldn't be surprised if we're pretty flat in the fourth quarter or just up about 5 percent from a year ago."

It is perfectly normal for assets to move up then down then up then down, where the lows are higher than previous lows or the highs are higher than previous highs. Once land values reverse direction, they are expected to exceed previous highs, based upon unprecendented population growth and wealth of the 'haves' relative to the 'have nots', and the shortage of natural resources. This is really a no-brainer. Buying land now or at the coming low would be a very smart decision.

 

[Brandonm22]

I just called a realty co. about 770 ranch in Altair Texas I saw for sale months ago.It was sold at $4000 per acre.I figure someone with a big chunk of money bought it,would pay anything to get it.Sell San Antonio water or put up game fence or gravel pit or just a cattle ranch?Who knows.But that is what got us in the mess we are in today.Makes it so the average guy can't afford buy a farm or ranch with crazy prices.

IF there are ~307 million people in this country (up from ~120 million in WWII) and IF a 20 year old today will easily live to see 450 million folks occupying the same ground is it really reasonable to expect that "the average guy" can afford to buy a large tract of productive land???

Trying to guess the markets which way things might go is same as playing in Vegas right now is my gut feeling.We can always regret we didn't buy,buy,buy but on other hand.You might really regret if things go sour.

I agree completely; BUT on the other hand if you have a big wad of cash on the sideline and we come out of this economic downturn with a weakened dollar you MIGHT have far less purchasing power than you do now. Even letting your money SIT in dollars is a VERY risky proposition right now.

 

[HerefordSire]

I am gonna make this plain and simple. The main portion of a land payment is interest if the payment is financed and amortized. Therefore, the lower the interest the better. Agree? View the following chart...and notice the bottom graph...this is the price of US Treasury Bonds since 1978...and the bond price is inverse to the interest yield (rate)....so the higher the bond price is, the lower the rate:

http://stockcharts.com/charts/historica ... b1978.html

Let me ask the two questions now: when in the last 30 years have interest rates been lower than right now? Here is another, but you will have to search a little...when was the last time interest rates were lower than they are now?

 

[alexfarms]

I am gonna make this plain and simple. The main portion of a land payment is interest if the payment is financed and amortized. Therefore, the lower the interest the better. Agree? View the following chart...and notice the bottom graph...this is the price of US Treasury Bonds since 1978...and the bond price is inverse to the interest yield (rate)....so the higher the bond price is, the lower the rate:

http://stockcharts.com/charts/historica ... b1978.html

Let me ask the two questions now: when in the last 30 years have interest rates been lower than right now? Here is another, but you will have to search a little...when was the last time interest rates were lower than they are now?

Looks like we are at or near the low. April 21, 1958 the prime rate was at 3.5%. It was raised to 4% on 9/11/58

 

[HerefordSire]

I am gonna make this plain and simple. The main portion of a land payment is interest if the payment is financed and amortized. Therefore, the lower the interest the better. Agree? View the following chart...and notice the bottom graph...this is the price of US Treasury Bonds since 1978...and the bond price is inverse to the interest yield (rate)....so the higher the bond price is, the lower the rate:

http://stockcharts.com/charts/historica ... b1978.html

Let me ask the two questions now: when in the last 30 years have interest rates been lower than right now? Here is another, but you will have to search a little...when was the last time interest rates were lower than they are now?

Looks like we are at or near the low. April 21, 1958 the prime rate was at 3.5%. It was raised to 4% on 9/11/58

Excellent answer. About 50 years. Therefore, land prices are on the verge of bouncing and will run higher that we have ever seen before. The Feds are flooding the market with cash. All these dollars will compete against each other. The Feds can't increase the land base (total acreage) except to buy another country or fill in wetland. Interest rates are at 50 year lows. The population is skyrocketing. There is a shortage of natural resources. Need I write more?

 

[alexfarms]

I am gonna make this plain and simple. The main portion of a land payment is interest if the payment is financed and amortized. Therefore, the lower the interest the better. Agree? View the following chart...and notice the bottom graph...this is the price of US Treasury Bonds since 1978...and the bond price is inverse to the interest yield (rate)....so the higher the bond price is, the lower the rate:

http://stockcharts.com/charts/historica ... b1978.html

Let me ask the two questions now: when in the last 30 years have interest rates been lower than right now? Here is another, but you will have to search a little...when was the last time interest rates were lower than they are now?

Looks like we are at or near the low. April 21, 1958 the prime rate was at 3.5%. It was raised to 4% on 9/11/58

Excellent answer. About 50 years. Therefore, land prices are on the verge of bouncing and will run higher that we have ever seen before. The Feds are flooding the market with cash. All these dollars will compete against each other. The Feds can't increase the land base (total acreage) except to buy another country or fill in wetland. Interest rates are at 50 year lows. The population is skyrocketing. There is a shortage of natural resources. Need I write more?

I can understand where you believe that we will see skyrocketing inflation because of the increase in the money supply. But surely at that point we will also see very high interest rates where we then see a negative effect on inflation. Once the economy heats the fed is gonna throw water on it to tame the inflation. I think what you are predicting is the obvious scenerio, I just wonder if we won't see periods of run away inflation.......followed by retraction, then a repeat. i don't see the solution to these economic problems being soon and I don't know if the solution has even been found or admitted to yet. Without the huge infusions of money into the economy, we would probably be in a depression now. The infusions of money aren't solving the problems, just putting off the the inevitable solution. The country has too much debt on assets that are way overvalued. Logic tells me the govt isn't going to be able to prevent the inevitable.......which in todays popular lingo is.......an unwinding of the bad debt in the economy and deflation in unrealistically overvalued property. In real dollars, valuations are headed down.

 

[backhoeboogie]

Interest rates are at 50 year lows. The population is skyrocketing. There is a shortage of natural resources. Need I write more?

Yes but there is more.

You left out the Capital Gains factor. Remember what Pelosi said in that regard? Lots of folks are biting the bullet right now while the rates are where they are. Pay the capital gains tax while it is still reasonable.

If capital gains taxes go back to what they were, lots of folks will be "flipping" gains into land and other comodities again. This will preclude giving away half of their gains. That will cause a surge in land sales - exactly the opposite of what is happening right now.

In 4 or 8 years capital gains could go back to realistic rates. People will take the profits then and we will be back in the cycle we are currently in.