Land prices / insane!!!

[jflournoy]

I don’t necessarily agree with this as there are a lot of less desirable rec farms on the market these days for the same high prices as what good farms in good areas command that would sell quickly if they hit the market. What used to cost a premium to be in good managed areas with good neighbor, income, and harvest history years ago became now anything with a couple trees and buck pics people want big money for.

"Want big money for" is not the same thing as "Get big money for". Not right now anyway. It's easy to think that because a property got listed for $6,500/acre that it must have sold at close to that price. In some rare cases that may be true, but for the majority...no. There's a number of high-priced hunting/rec properties (of varying quality) sitting on the market right now in southern Iowa doing nothing, including some with good harvest history on nice bucks. How to explain? Interest rates are part of it because the number of buyers is smaller right now, but just as big a part of it is "they're priced too high." List prices in southern Iowa for hunting land by and large are not in equilibrium with the current market.

 

[chipterp]

Agree to disagree I don’t know what high quality farms you are talking about. We tried to get a couple guys together to go look at the 1300 acres in van buren that sold a while ago and there were multiple showings lined up and ended up sold to the first guy that put an offer on it. Also most people don’t even know about the good farms that are sold without ever making it to the realtors page at full asking or above. We got an offer from a realtor for his client for our van buren farm a couple months ago for $6500/acre and it wasn’t even for sale.

 

[tall@wide]

Agree to disagree I don’t know what high quality farms you are talking about. We tried to get a couple guys together to go look at the 1300 acres in van buren that sold a while ago and there were multiple showings lined up and ended up sold to the first guy that put an offer on it. Also most people don’t even know about the good farms that are sold without ever making it to the realtors page at full asking or above. We got an offer from a realtor for his client for our van buren farm a couple months ago for $6500/acre and it wasn’t even for sale.

I agree. A true top notch hunting farm will sell fast and bring top dollar. Especially when you stay under the 1 million dollar range. When you get over that. it really limits who can buy it. The last farm I sold wasn't even for sale, but I had an offer I could not say no too. Wealthy guys want the best deer hunting farms on the planet, and they are willing to pay for it.

 

[jflournoy]

Agree to disagree I don’t know what high quality farms you are talking about. We tried to get a couple guys together to go look at the 1300 acres in van buren that sold a while ago and there were multiple showings lined up and ended up sold to the first guy that put an offer on it. Also most people don’t even know about the good farms that are sold without ever making it to the realtors page at full asking or above. We got an offer from a realtor for his client for our van buren farm a couple months ago for $6500/acre and it wasn’t even for sale.

Just look at Landwatch for a bunch of different southern Iowa counties. Lots of properties just sitting. Some obvious good hunting properties, some marginal ones.

Glad you brought up that 1306 acre property in Van Buren County because it actually goes to the point I was trying to make, which is that "list price" doesn't always equal "sale price", especially in a slower market like this. List price on that farm was $8,990,000. But it actually sold for *$7,210,000*. A 20% haircut off list price. Just because it went under contract quickly didn't mean it sold at or close to list price. That was a very unique property because of the size. There was never going to be anything but a very, very small pool of legit eligible buyers for a property of that size so I'm not surprised the seller accepted the first offer they got. Did it still sell for a strong price? Yes. Close to list price? No.

I acknowledged that there are still a minority of properties going for unusually high prices, but that is not the norm right now. A lot of the guys who are cash buyers and financially capable of still being active in the current market *despite current interest rates* didn't get in that position by making a habit of overpaying for stuff. It happens, but not the norm. Sale data is public information regardless of whether it was a public listing or a private sale.

 

[JNRBRONC]

Nobody is talking about what rec ground in other states like PA is bringing. More populous states have higher demand and I think higher prices. Maybe apples to oranges?


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[tall@wide]

Just look at Landwatch for a bunch of different southern Iowa counties. Lots of properties just sitting. Some obvious good hunting properties, some marginal ones.

Glad you brought up that 1306 acre property in Van Buren County because it actually goes to the point I was trying to make, which is that "list price" doesn't always equal "sale price", especially in a slower market like this. List price on that farm was $8,990,000. But it actually sold for *$7,210,000*. A 20% haircut off list price. Just because it went under contract quickly didn't mean it sold at or close to list price. That was a very unique property because of the size. There was never going to be anything but a very, very small pool of legit eligible buyers for a property of that size so I'm not surprised the seller accepted the first offer they got. Did it still sell for a strong price? Yes. Close to list price? No.

I acknowledged that there are still a minority of properties going for unusually high prices, but that is not the norm right now. A lot of the guys who are cash buyers and financially capable of still being active in the current market *despite current interest rates* didn't get in that position by making a habit of overpaying for stuff. It happens, but not the norm. Sale data is public information regardless of whether it was a public listing or a private sale.

One thing I'll say about properties on landwatch is........I look at landwatch daily and I see a lot of marginal or maybe good hunting farms, but it is rare to see a great one. I think they sell before it gets to that point unless it's a high acreage/expensive farm.

 

[jflournoy]

Just look at Landwatch for a bunch of different southern Iowa counties. Lots of properties just sitting. Some obvious good hunting properties, some marginal ones.

Glad you brought up that 1306 acre property in Van Buren County because it actually goes to the point I was trying to make, which is that "list price" doesn't always equal "sale price", especially in a slower market like this. List price on that farm was $8,990,000. But it actually sold for *$7,210,000*. A 20% haircut off list price. Just because it went under contract quickly didn't mean it sold at or close to list price. That was a very unique property because of the size. There was never going to be anything but a very, very small pool of legit eligible buyers for a property of that size so I'm not surprised the seller accepted the first offer they got. Did it still sell for a strong price? Yes. Close to list price? No.

I acknowledged that there are still a minority of properties going for unusually high prices, but that is not the norm right now. A lot of the guys who are cash buyers and financially capable of still being active in the current market *despite current interest rates* didn't get in that position by making a habit of overpaying for stuff. It happens, but not the norm. Sale data is public information regardless of whether it was a public listing or a private sale.

I stand corrected, I was wrong. I know the buyer's agent on that deal and he confirmed the property was held by seller in 2 llc's so data on Van Buren tax site was a little misleading.

That does not change my original point that list price and sale price frequently are nowhere close to the same thing, and there are good hunting properties for sale right now that are sitting because they're priced too high. I talk to a number of other land agents on a regular basis. Things are slow for hunting/rec ground right now. High interest rates + High prices.

 

[IowaBowHunter1983]

816 rec acres just sold around here. Looks like 5500.

 

[jflournoy]

816 rec acres just sold around here. Looks like 5500.

Much income or just pure hunting land?

 

[Sligh1]

Side thought… let’s say inflation is up 25% since ‘20. Probably more in reality but around what CPI would say. So- if u bought a farm for $3,000/acre in ‘20 & sold it for $4,000 now- in terms of value of dollar- u didn’t make a thing. Or in reverse, if u coulda bought for 3 & now it’s 4- u paying Same price based on value of dollar. Or $6k to $8k - whatever. Just factor in, the value of your dollar is much less now.
Guys who may be spending 7-8% interest right now can’t make that up by inflation beating it. There’s a lot of guys buying land with loans even though most land is debt free. With ROI’s at 1-3% … (negative on some rec farms) - something will have to give. MUST. Land prices MUST keep rising to keep these folks ok. Or a reduction in interest rates. Or a great economy to subsidize the losses. Or an increase in ROI due to higher commodities or other income. If any of those things go wrong way - not saying they will or wont - big impacts.

 

[Thinkin Rut]

Joshua...Thank you for hanging with this thread!! IMO the 1300 is such an anomaly it's not even worth talking about. I'm going to split one of your previous posts in two because it really is two thoughts.

Southern Iowa land market is still way above 2020 prices, even with the market cooling off. Lack of inventory is key. I think there would be a correction to some degree if there was more inventory. As you say, still plenty of cash buyers, but not a lot of financed buyers in the market right now for discretionary hunting land purchase.

I think what might be happening is not only a lack of inventory but a lack of premium properties in certain acre sizes. If you have a solid 80 sitting in a great neighborhood...it's bringing a premium and selling. If you have a marginal piece, it could sit awhile and one may have to come down or possibly a buyer may be tired of waiting for the ideal property and cave. I only used an 80 because they seem to have more buyers, the more acres, less buyer's. That hasn't changed. My most hated term is "they ain't making any more of it" may be coming true or at least for these times.

I talked to a couple different lenders last week that do a lot of lending for land and they both said that loan applications for hunting land have been very slow for a while now. Not much reaching and paying way above market prices like in late 2021 and 2022.

It doesn't surprise me that the lending applications are very low. I'd guess the majority of the people that wanted a piece 20-80 acre size, bought a piece when rates were low and then you had the otherwise cash buyers borrowing because it was free money in a sense. These people are holding because they bought into the lifestyle for the long haul and the would be flippers wanting a larger piece now are holding because the new interest rates have priced them out. The job market is still strong so no one is selling in desperation either. Looking back...you didn't need a ROI, your ROI was in your interest rate. Now the guys that are late to the game are mainly cash buyers, they don't reach and overpay, that's how they got in that position. It may be only an illusion that prices are coming down. It's hard to say what land may do if the Fed could really put together a soft landing and interest rates come down without a slowdown in the economy prior. It almost seems too good to be true and you know what they say about that.

 

[jflournoy]

Side thought… let’s say inflation is up 25% since ‘20. Probably more in reality but around what CPI would say. So- if u bought a farm for $3,000/acre in ‘20 & sold it for $4,000 now- in terms of value of dollar- u didn’t make a thing. Or in reverse, if u coulda bought for 3 & now it’s 4- u paying Same price based on value of dollar. Or $6k to $8k - whatever. Just factor in, the value of your dollar is much less now.
Guys who may be spending 7-8% interest right now can’t make that up by inflation beating it. There’s a lot of guys buying land with loans even though most land is debt free. With ROI’s at 1-3% … (negative on some rec farms) - something will have to give. MUST. Land prices MUST keep rising to keep these folks ok. Or a reduction in interest rates. Or a great economy to subsidize the losses. Or an increase in ROI due to higher commodities or other income. If any of those things go wrong way - not saying they will or wont - big impacts.

I talked to 2 different lenders last week, both of whom loan a lot of money for both hunting land & tillable land purchases and they both said new loan applications for hunting/rec land have been pretty dead for months. No, they're not the only 2 banks lending for hunting land in southern Iowa, but they lend a lot and are well known for it.

 

[Thinkin Rut]

Side thought… let’s say inflation is up 25% since ‘20. Probably more in reality but around what CPI would say. So- if u bought a farm for $3,000/acre in ‘20 & sold it for $4,000 now- in terms of value of dollar- u didn’t make a thing. Or in reverse, if u coulda bought for 3 & now it’s 4- u paying Same price based on value of dollar. Or $6k to $8k - whatever. Just factor in, the value of your dollar is much less now.
Guys who may be spending 7-8% interest right now can’t make that up by inflation beating it. There’s a lot of guys buying land with loans even though most land is debt free. With ROI’s at 1-3% … (negative on some rec farms) - something will have to give. MUST. Land prices MUST keep rising to keep these folks ok. Or a reduction in interest rates. Or a great economy to subsidize the losses. Or an increase in ROI due to higher commodities or other income. If any of those things go wrong way - not saying they will or wont - big impacts.

Or incomes catch up with inflation...which creates more inflation. That's how it's designed, printing press vs. gold standard. If you're buying REC ground to make real money, you're kinda pissing in the wind or you have to be very selective.

So- if u bought a farm for $3,000/acre in ‘20 & sold it for $4,000 now- in terms of value of dollar- u didn’t make a thing.

And if you had a Fed target of 2% per year, your $3000 per acre land would be selling for 3180 today. Anything above that would be in anticipation of what it will be in say 10 years or what your ROI is on that piece. Very much like stocks today...young company showing promise or proven company showing how to adapt with the industry demands a higher P/E. Not all REC land is worth $6500 per acre and not all stocks have a high price and P/E ratio.

 

[Wi transplant]

I had 2 smaller pcs buy my farm go up for sale this fall buy my farm . One pc about 28 acres and accross road about 14 same seller the 28 had about 15 tillable and a nice pond approx 3/4 acre ( nice spot for a house ) both listed separate or together for 8k acre and i seen yesterday its not listed anymore!! I didn't think it would sell in that price range ! Appanoose co.

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[jflournoy]

I had 2 smaller pcs buy my farm go up for sale this fall buy my farm . One pc about 28 acres and accross road about 14 same seller the 28 had about 15 tillable and a nice pond approx 3/4 acre ( nice spot for a house ) both listed separate or together for 8k acre and i seen yesterday its not listed anymore!! I didn't think it would sell in that price range ! Appanoose co.

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Quite a bit different market when you're talking about a small acreage that is a nice spot for a home or already has one. Definitely a better chance they go for higher $/acre.

 

[Windlooker]

I could sell my farm in southern Iowa tomorrow for asking. To use a blanket statement of farms in southern Iowa are sitting is general. There’s soooo many factors from farm to farm. I get that you’re a realtor but the tone is one of wishing the market goes down vs what many here are experiencing, me included. Three farms sold in my block in a week for asking last spring/summer. How long have you been in the business if I can ask ?

 

[Hardwood11]

Just look at Landwatch for a bunch of different southern Iowa counties. Lots of properties just sitting. Some obvious good hunting properties, some marginal ones.

Glad you brought up that 1306 acre property in Van Buren County because it actually goes to the point I was trying to make, which is that "list price" doesn't always equal "sale price", especially in a slower market like this. List price on that farm was $8,990,000. But it actually sold for *$7,210,000*. A 20% haircut off list price. Just because it went under contract quickly didn't mean it sold at or close to list price. That was a very unique property because of the size. There was never going to be anything but a very, very small pool of legit eligible buyers for a property of that size so I'm not surprised the seller accepted the first offer they got. Did it still sell for a strong price? Yes. Close to list price? No.

I acknowledged that there are still a minority of properties going for unusually high prices, but that is not the norm right now. A lot of the guys who are cash buyers and financially capable of still being active in the current market *despite current interest rates* didn't get in that position by making a habit of overpaying for stuff. It happens, but not the norm. Sale data is public information regardless of whether it was a public listing or a private sale.

The owner probably paid 3 million for it, and then laughed when someone offered 7 million for it and then said “mission accomplished “!!

 

[jflournoy]

I could sell my farm in southern Iowa tomorrow for asking. Great, though that doesn't really tell me anything given I know nothing about your farm or what price you would ask to sell it.

To use a blanket statement of farms in southern Iowa are sitting is general. I'm on Landwatch every day. There's a lot of farms that have been sitting for months. Still "available". I'm not just pulling it out of a hat or drawing on my own experience, though I have been involved in 25 sales since the market really started going crazy in 2021. I was the listing agent on most of those so I knew exactly what kind of activity there was from buyers or buyer's agents reaching out to me. I talk to other agents on a regular basis, both inside my brokerage and from other brokerages and there is a consensus that it is *slow* right now for hunting/rec land. Not that *nothing* is selling, but the market has changed since 2022. Not to mention when land lenders tell me they're not getting many new loan applications for hunting/rec land, that means something and I listen.

There’s soooo many factors from farm to farm. Absolutely there are. Which is why *some* farms are still selling for above average prices. But they're in the minority right now.

I get that you’re a realtor but the tone is one of wishing the market goes down vs what many here are experiencing, me included. I'm sorry if that's what you're taking from what I've shared, but that's not it at all. I just believe in calling it like it is. My job is to sell land for my seller clients. If the data said that the majority of hunting/rec farms in southern Iowa were going for $6,000-$6,500/acre right now, then believe me, that's what I'd be telling my sellers and potential sellers. After all, the more the property sells for, the more $ I take home as well. Why wouldn't I want that? But that's not what the data is showing, even if *some* pieces are selling for $6k/acre+ that doesn't mean all or even a majority are. Sales prices are not a mystery. They're public information. Farms sitting on the market for months at high prices is not a mystery, available for all to see on-line. If hunting/rec farms were selling briskly in southern Iowa currently for above average strong prices - like in late 2021-2022 - there would be more inventory on the market and there would be fewer farms sitting for months unsold.

Three farms sold in my block in a week for asking last spring/summer. Yes I believe I recall we discussed that some months ago, if I recall you said you were interested and thought they were too high but the realtor said something about them basing the list prices off the ISU Land Value survey data and if you didn't like that then tough cookies? Just the fact that the properties sold for asking price isn't really indicative of anything. It doesn't say whether they were priced properly or not. And it doesn't tell us anything about the current state of the hunting/rec land market in southern Iowa. Last spring/summer is a while ago also. You yourself said "There's soooo many factors from farm to farm." And I agree with that statement, absolutely. Based on my experience, the hunting/rec land market is slower right now than it was last spring. I'd say those properties probably weren't priced too low for the market if they sold that quickly, but maybe they should have been priced even higher? The ISU Land Value county level survey data is just an "average" of multiple different kinds of land/land uses/land values. Chances are pretty slim in my opinion that any individual property's actual market value is going to line up perfectly with the countywide average where that land is. The ISU survey is good at showing land value *trends* from year to year, but I wouldn't recommend anyone just "use that number" to list their property for sale at without additional research on the market and comps. I can absolutely guarantee you that the countywide average for my home county is *not* what the average piece of hunting/rec land sold for here in 2023. But it's understandable that the average number was higher since there were some strong tillable land sales in 2023 no doubt included in that average number.

 

[jflournoy]

The owner probably paid 3 million for it, and then laughed when someone offered 7 million for it and then said “mission accomplished “!!

There's some people that have made some stupid money buying and selling in southern Iowa in the last couple years, no doubt about it.

 

[2-bucks]

that 1306 acre property might have gone 20% under list but it was still over $5500 an acre. That's not like it's a low price.