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OKdon
Senior Contributor

Re: Land Markets

Good post!

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Red Steele
Veteran Advisor

Update on So MN land markets

Local realtor has a 200 acre farm listed for $8000 per tillable....grade B soils, irregular fields....been on the market for over two years...good luck with that one.

 

In the real world, a Brown County tract no saled for $3800 per acre a few weeks ago...decent soils, not spectacular.

 

The real shocker was two days ago...120 acres sitting on two major highways... a couple of miles from Mankato...BLue Earth County , very good soils ...B plus to A minus land....small fields though.....would have thought it would bring $15000 per acre....similar piece for sale, non tillable, by St. Cloud MN has a large billboard listing it for sale at $14995 per acre.

 

Guess what the final bid was? 

 

$5200 per acre.

 

Its hard to find these actual sales reported...that was what my post was about. Every one talks about the 80 that brought $11000, but there really isnt a good tracking service for what is happening in real time.

 

TIme to be very cautious and pull the horns in. My two cents.

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Jim Meade / Iowa City
Senior Advisor

Re: Update on So MN land markets

I think in Iowa you can get land prices from the county assessor's office online.
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bruce MN
Advisor

Re: Update on So MN land markets

It's available here as well

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Red Steele
Veteran Advisor

Re: Update on So MN land markets

Usually a year or so lag time, right? But that is a good tool if you know of a sale and are willing to wait to see it posted. It's always interesting to see the actual black and white results vs. the coffee shop crowd's version. You know, the guys that are all experts on everything but can't even figure out how to get out of debt.

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Kay/NC
Honored Advisor

Re: Land Markets

Sounds as though the outside investment money has left the ag sector to me.  They did the same thing in the hog business in the nineties in NC.  Couldn't run fast enough...

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k-289
Senior Advisor

Re: Land Markets

There are many operations around the western corn belt that will still pay a premium for good land - and it's called cash ---  

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OKdon
Senior Contributor

Re: Update on So MN land markets

You can wait for that farm to be a bargain but you still have you have the cajones to seal the deal. Watching farm land depreciate until it reaches 1/3rd of its previous value indicates that the decline may not be over yet. So there is always risk of paying too much. I've always paid too much for farm land, it is only afterwards that we become aware that it was a good decision.

 

That is why the coffee shop crowd don't ever buy land. They only look at the negative possibilities and presume that the new property will have a negative cash flow. That is because preserving current cash flow is more important to them than postponing cash income for a increased income at a later date.

 

Land is along term investment and often intergenerational. You buy a farm today and over time you pay for it and it throws off income for the rest of your life and perhaps your childrens lives. So does it really matter if you pay $5k per acre of $7k per acre? What matters  is whether your personal cash flow from all sources will support the purchase. After the tract is paid for that parcel will support the purchase of the next buy and the one after that.

 

 

.

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BA Deere
Honored Advisor

Re: Update on So MN land markets

Well, there`s alot of factors a couple years ago when any soil that would hold up a plant was bringing $13,000/acre, every fall it appeared you`d sell +$6 corn off the combine and 3% land money was abundant...all those factors had to be in place to support those land prices.  And at that time who knew?  Corn could`ve hit a new $10 price plateau, interest probably couldn`t have been expected to have gotten any cheaper than 3%.  But $13,000 is high priced by anyone`s yardstick, it was probably 4 times higher than any of us had heard, while corn was just double a "good price" ...20/20 hindsight, land shouldn`t have gotten above $7,000.

 

That cheap money and the promise that the world population will be 9 billion by 2050 and now farming is fun probably created irrational exuberance by twice on land prices.  There`s herd mentality among farmers, all it takes is one nut to try combining green beans and then everybody else has to try it, even though it makes absolutely no sense  Smiley Happy

 

In the 80`s, I really thought as badly as farmers were burnt it would destory their risk taking gene.  But their memories were pretty short and it was off to the races before the end of the decade. Of course even with bargain land prices in the 80`s and 90`s money was high priced and hard to get. Those sweet spots of cheap money and low land prices are very rare, probably during those times grain prices are low and off farm income will be needed to make the farm payments.

 

What`s different today is some farmers own +1,000 acres and if they desire to buy a quarter, they have enough horsepower in reserve that they can easily over pay on a single parcel.

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sw363535
Honored Advisor

Re: Update on So MN land markets

Two factors

 

Cheap interest....

 

And there is nowhere else to find an investment that matches it.  cheap interest

 

price of land may get cheaper, but not dirt cheap

 

Smiley Happy

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