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Land prices / insane!!!

2-bucks said:
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.
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I was incorrect about that and posted to that effect in another post above. But you're right, even if it sold for $5,500/acre (it went for more than that), that is not a low price. And even if there is a correction, I don't know if we're ever seeing sub-$4k/acre prices on hunting land in southern Iowa ever again. But I can also tell you that even if there are a few special properties selling for $6k+/acre, even now that things have slowed down some, that is not the new normal either. Not yet anyway.
 
Part of this topic should also include discussion about expectations. Properties are no doubt sitting on the market longer now than they were 2 years ago. I doubt there are many more or less properties with "issues" on the market now, as a percentage, than there were 2 years ago. That means there are likely other explanations for why properties are taking longer to sell. Higher interest rates = fewer buyers. Higher prices = fewer buyers. I don't really think it has to be any more complicated than that. It's certainly not because there is a glut of good properties for sale on the market.
 
I think its pretty much a certain thing that just about any decent rec pc of 100 acres or less is gonna be 5500 or more per acre! Above 500k for a pc is a different level of buyer. You loose alot of potential buyers north of 500k my thoughts..

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I think a lot of people that are paying stupid money for land are going to have buyers remorse. Deer population being in the shitter in a lot of places, will have a lot of new buyers questioning their decision.
 
Painfully upsetting to say the least. It has always been a goal of mine to own a farm. While I got a decent chunk of change for signing, a minor league salary was peanuts at the time. Cash flow was none existent.

Timing is everything.

At the end of 2018, ball gave me the boot so I began working. In 2020 I was a second year apprentice (also a freshman in college) and my wife was still in college. I had the opportunity to purchase a farm for under 4K an acre (obviously all time low interest rates as well). I couldn’t swing a home and the farm off my income so it never happened. 3.5 years later our household income has quadrupled and with a 40% price increase on ground plus high interest rates it still doesn’t seem feasible. We could probably swing it but I would feel completely selfish allocating those kind of funds for my own interests. Instead, we are cancelling debt and will look back into ground down the road.

This market is not meant for the borrower, cash is king.


2011 I watched my grandparents buy ground for just under 2k an acre
2012 the neighbors 80 sold for $1500 an acre

Now both farms would easily fetch 6k+ an acre.


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There was a farm just down the road on a steffes auction in last couple weeks. Farm is a little cut up with a tiny creek and a big waterway, but csr2 was 92 I think. Was 144 acres with highway access. I think it brought 11,700 per acre. Not sure if they no saled it or not. I thought it would bring 18 or 19k. Farm also has a history of seedcorn. Interesting for sure. I rent a farm a mile away with aph of 240 corn and 71 beans so this is prime dirt.
 
Sligh1 said:
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.
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Have cash rents or wages or CRP rental rates gone up 25% since 2020??? I know the answer. Just food for thought. And living costs are also much higher…. Disposable income down yet higher interest and higher prices. Better have a sharp pencil.
 
Muskrat24 said:
Have cash rents or wages or CRP rental rates gone up 25% since 2020??? I know the answer. Just food for thought. And living costs are also much higher…. Disposable income down yet higher interest and higher prices. Better have a sharp pencil.
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Cash rent rates actually probably went up 20-40% since 2020 by me. Corn was 3-3.50-ish and beans were $8-11 for many years. Stuff that was cash renting for $150 went to $200-225 when corn got to $6-7 & beans got to like $15-ish. Like any cycle, it appears to be trending down again - or at least commodities have dipped a good bit from their recent highs.

CRP rates went up big time as well. Obviously they follow the cash rent rates. By me, where it was super low…. Was like $140/average. It’s about $180-190 now.

Cost of living went up too, spot on! A lot of it involves above^^^^. When corn goes up, your food prices go way up. Almost all commodities went up. INFLATION. If someone was locked into: land, a house, the stock market, commodities - they had those values go up as well. It’s the folks who don’t own those assets that are living pay check to paycheck that get killed during inflationary periods.

Now- even if ground got to “$20k an acre” for hunting land (clearly it’s not and clearly this is over valued insanity) …. At some point, IMHO, if you want ground…. U gotta bite the bullet and buy SOME. If it’s way over priced- buy less. & don’t buy stuff where it will sink u if u lost your job. I totally agree it’s overvalued right now. Or just high. But - the same could be said about anything folks spend $ on… it’s all high. Any investments…Stocks are high, rental properties, gold, etc. All this stuff will run cycles though. It does NOT mean the values will be cut in half (yes - it IS possible) but they shift from sellers market to buyers market. Or things like a 10% softening is very possible. When things aren’t moving, ground that was bringing say “$10k an acre” - a seller might start looking at taking $500 less to get it moved. If we have a deep recession (no clue if if/when happens) - absolutely COULD see a 20-30% discount on rec stuff.
These are all things 95% of buyers need not think about too deeply. If u want ground badly.. absolutely a way to do it. If it’s 100% your goal- do not get hyper focused on the price & market…. Buy a farm u like for a “reasonable price” & don’t over think it.
 
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