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09-30-2012 09:45 PM
this is where I wish coup was around.........to get his thoughts.......
but, thats not the case, I got booted so..........o.............well............censorsh
so.........just my opinion here..........but it feels like land prices are near a top...........
why you ask........
well 200 @ 5
or 150 @ 7
either way it appears that gross is topping off..........the exception being those areas that picked up a nice timely rain............
take variable cost........and fixed cost...........and a stable gross.......add for a tightening against COP........
well you get my idea here........
just feels like things are topping out..........
correction time, if so.................how much..........thinking 30%...........thats about it unless policy changes substantially...........
10-01-2012 06:38 AM
IMO land might not have double digit% gains anually here on out, but won`t go down either. Let`s say someone owns a $10,000/acre farm that after property tax and fixin` tile they net $200/a in land rent, that`s a solid 2% return, if they went to the stock market it could be here today and gone tommorrow, interest in the bank doesn`t keep up with inflation. Interest rates sound to be low into 2015. It`s an anomaly that farmland "cash flowed" 25 yrs ago. Today there are too many with a warchest chasing land and land is held in tight hands. Conventional wisdom is: hang on to land, it eventaully goes up. Throw out the early 1980`s and those bullish on land have been right ever since they layed the rail. The one caveat is if the upcoming election turns out a win for wealth redistribution, then who knows? Someone would have to be nuts in the head to buy a bunch of land only to give 55% of it to the govermnent when they die, shoot, if we go communist in November, stick as much dough as you can off-shore. Cause you can`t put a section of land in your knapsack and go "John Galt".
10-01-2012 06:46 AM
You may be 6-12 months early in your feeling as farmers are gonna be flush with insurance cash. Big money is movin to land due to 2-4% return and new crop 13 prices are still very respectable. jmo
10-01-2012 07:45 AM
land is topping out most markets dont' stay flat for very long, I don't think the banks are going to be crazy about lending more money out with no farm bill and with 1/2 a crop of corn. I'm not for sure how flush guys will be for money. Crop insurance just keeps you alive.
on the idea of wealth accumulation and what not you need to read this article from Fox news.
10-01-2012 08:04 AM
History would say you are incorrect when you say it will not go down.
I believe it is true across North America that land prices in 1928 were not matched again until around 1950 or even 1960 in lots of areas.
That is a long wait to get your money back if you want to retire.
Taxes here are just on increased value or your profit from investing and that is what is over a sizable per person allowance of $375,000 with no tax. That is income that is tax free.
10-01-2012 08:48 AM
I see that it all depends on the november elections. If the big red OB wins we slip into a post ww1 german hyper inflation scenario, we could see 20,000 an acre in that situation, we will need to worry about other things besides land then. If we get Romney in office he will need to attack inflation like Reagan did post Carter. Raise interest rates into a deflationary hell until the dollar and interest reach market rates. It is probably the flushing needed by the economy for a long time. It is deflationary farm land because money will go back to CD's and Money markets because attracktive rates and stability.
One othe scenario is Obummer debases the dollar so much china stops buying US debt. Of course the US government and the market is severely compromised and you wont get money from a bank to buy farmland since the banks wont have liquidity to loan out money. Land values would then crash.
10-01-2012 10:40 AM
Cash is the difference compared to the past.
I don't have the numbers but the 80's was all about leverage; today, it is all about cash purchases or a healthy down payment. Prices may level off, but there should not be the forced sales we saw in the 80's or are seeing in the present housing mess which was leverage based.
These numbers support continued strength. with historically low supplies on hand, there should not be a massive swing the other way. I expect crop prices to soften but not collapse unless we have some really good productive years in a row.
But nobody, and I mean nobody, knows...................
10-01-2012 11:20 AM
Those that are buying land and those that would like to.
However, there are those that consider farm land an intergenerational investment. Short term gains and losses in value are not a serious problem. Cash flow is but not for the farm. The buyer needs to cash flow whether the money comes from off the farm or previously owned farms or the medical practice the buyer has in town.
My perspective goes back to my youth and the historical family farms that have been held for generations and are still held by the same families or heirs of families Itdoesn't matter whether that land is worth $1k per acre or $10k per acre it will stay in the family no matter what happens.
Evidence of my argument is the thousands of acres that have appreciated` from a few hundreds per acre to many thousands per acre. A really small percentage has been brought to market even with outstanding gains.
10-01-2012 12:26 PM
Canuck that is true what you typed, A guy that was to me old, his family moved out here in 1921 bought a farm, when his dad died in 1960 they didn't get as much for that farm per acre basis then what he paid for it.
I still stand behind the idea that land isn't as great as investment as what people think, Everything looks good when its in a bull run