Lets Speculate on Land Prices

[foggy]

It's that time of year to speculate.

I was reading a few University reports on falling land prices. Most sing the same tunes: that the commodity prices won't support the past land prices. I see ag-land buys now as similar to catching a falling knife. Somebody could get cut. Gonna take a few years for that PREMIUM ag-land to level out at lower numbers......or a return of higher commodity prices (unlikely for some time IMO.)

Seems to me though, that some of the recreational and lower producing farms remain fairly priced. Maybe not in southern MN or much of Iowa.....but in southern Iowa and MO....those numbers appear reasonable.

FYI. Here is a report on Land sales - primarily in southern MN: http://www.ummc.co/past-sales-history/ Interesting trend in prices over a ten year period.

 

[foggy]

Illionois says land is selling for 14% lower prices in 2014 than 2013. MN reported about 5% less this past summer. The trend is definitely lower.

 

[bwoods11]

Farm land has dropped in my area. I just sold 135 acres of tillable (excellent stuff) for around 5k an acre. That same farm would have brought 6-7k during the prime time (top of the market) in my county.

Southern Iowa I would say the tillable is dropping and some of the timber is not as hot as it was. There was a nice all timber farm with a house and pole shed that just sold for $2400 an acre. House was not much, but overall it was a good buy. The parcel had several nice bucks in the 140-160 range on camera.

 

[foggy]

I don't see how farm land prices can't begin dropping

Yep, and I agree. But historically the price swings tend to me far greater than what turns out to be "reality". Possibly the prices will swing so much lower that GOOD ag-land we be a great value again? If my guess is right.....in about 3 - 4 years from now......prices will crater on the low side.

 

[sandbur]

I see deer woods in northern wisconsin going down while high dpsm central woods Going up ag also slipping but milk prices are really high right now

Milk is expected to drop 25% by some time in 2015. Profits will be gone for many dairyman.

 

[TMIL]

Illionois says land is selling for 14% lower prices in 2014 than 2013. MN reported about 5% less this past summer. The trend is definitely lower.

It only makes sense. Commodity prices are low, making farm ground less valuable. And the rec (deer hunting) ground is taking a hit as the public realize that the deer numbers are way off. It is a little disappointing to realize my property value might be less than it was, but it doesn't bother me too much. I don't ever plan to sell. However, if the prices keep trending lower, I might be open to adding property in the future. I have less than 3 years until my current 40 is paid for, so I might be in the market then. It could be a good time to hit the soft market. We'll see.

 

[BJE80]

The capitol many dairy farmers have tied up in their land is staggering.

 

[chickenlittle]

Since NY just banned hydraulic fracturing, I am hoping land prices fall some around me and there will be less hassle about gas rights and leases. I gave up trying to purchase until this got figured out one way or the other. Not that the issue will go away. I am sure the land owner groups are preparing to file the lawsuits.

 

[MoBuckChaser]

Many livestock farmers have no choice but to pay high prices for land. They can only spread so much manure on existing soil to stay in compliance.

 

[BJE80]

Many livestock farmers have no choice but to pay high prices for land. They can only spread so much manure on existing soil to stay in compliance.

Very important. No question. And driving higher tillable land prices no question.

 

[foggy]

If you follow currency markets however.....consider what has happened (and is now happening) in Russia. There, the value of their dollar has fallen by 50% this year alone. Folks are rushing to buy anything of lasting value. Land would fit this description.

Fast forward a few years......and the USA is going to have to deal with our credit bubble at some time......and interest rates won't stay depressed forever. When the US dollar gets hammered (as I believe it will) then, I fear, today's land prices will look C H E A P.

Still, it's hard to be on the right side of some of these swings.....and holding costs (like taxes) don't get any cheaper on real estate. The game is rigged.

 

[MoBuckChaser]

If you follow currency markets however.....consider what has happened (and is now happening) in Russia. There, the value of their dollar has fallen by 50% this year alone. Folks are rushing to buy anything of lasting value. Land would fit this description.

Fast forward a few years......and the USA is going to have to deal with our credit bubble at some time......and interest rates won't stay depressed forever. When the US dollar gets hammered (as I believe it will) then, I fear, today's land prices will look C H E A P.

Still, it's hard to be on the right side of some of these swings.....and holding costs (like taxes) don't get any cheaper on real estate. The game is rigged.

It is not hard at all to be on the right side. But almost everyone ends up being on the wrong side for some reason........oh yah, it's called stupidity!

 

[chickenlittle]

Taxes and property values don't really go together. If all the property values decline, the taxing entity does not decide to tighten their belts to help out. They still want the same or more next year. They simply raise the tax rates to make sure they have the needed revenue.

 

[bat man]

It's that time of year to speculate.


FYI. Here is a report on Land sales - primarily in southern MN: http://www.ummc.co/past-sales-history/ Interesting trend in prices over a ten year period.

I can't get that report to load for me. I always wanted to compare county by county rec land in areas that held good deer numbers over time to areas like mine where vehicle crashes are off 85%. Parcels in my area are listing for less now but list price means nothing.

 

[Jim Timber]

They're predicting inflation will remain in check for several years, and that the fed isn't going to be raising interest rates any time soon. Cheap cash will keep prices where they are on rec land, but the stuff that needs to cash flow will continue to drop as commodities decline.

Now would be a great time to import some Russian tractors. Too bad that's probably illegal. :rolleyes:

 

[tooln]

I think northern WI will see lower prices. Hunting property up north is going down and I believe this to be due to the wolf population. What was once considered prime hunting is no longer true.

 

[shawnv]

Yep, today's ruling is only going to bring Northern WI prices down unless it's lakefront.

 

[SD51555]

I don't see how farm land prices can't begin dropping

In hot markets, the fool sets the market price. In cold markets, the genius sets the price. We're still in a hot market.

 

[ELH]

Yep, today's ruling is only going to bring Northern WI prices down unless it's lakefront.

Prices can only go so low before timber value comes into play. Had a timber cost basis done on our property we purchased a little over a year ago and the value of the standing timber at time of purchase is more than we paid for it. Now I don't plan on clear cutting it, but it's nice to know there is some substantial value there other than how many deer are on it.

 

[shawnv]

Prices can only go so low before timber value comes into play. Had a timber cost basis done on our property we purchased a little over a year ago and the value of the standing timber at time of purchase is more than we paid for it. Now I don't plan on clear cutting it, but it's nice to know there is some substantial value there other than how many deer are on it.

Agreed, if you have good timber that does give you an insurance policy. I remember seeing land back in the mid-90's under $500 an acre so in today's dollar maybe the low is $600-800 an acre up North.