Land Market Hasnt Slowed down

[Trapshooter1]

3 tracts sold today at auction, and needless to say the Market hasn't softened.
39 acres sold for 16,000/acre. 83.9CSR2 Tiled and 2 terraces.

72 acres sold for 13,500/acre. 72CSR2
Drained. But needs to be split.

76 acres, 66.10 Tillable 8700/acre.
A little over 10k/acre on the tillable.
No Tile, Farm cut end to end with a creek. And 1/3 of the farm is blow sand.

I thought 7-7.5% interest on real estate loans, and a FED continuing to raise interest rates. Would slow the land market. I think there is to much money in to many hands to see a slump in the market.
This may take awhile for things to slow down.

 

[Muskrat24]

3 tracts sold today at auction, and needless to say the Market hasn't softened.
39 acres sold for 16,000/acre. 83.9CSR2 Tiled and 2 terraces.

72 acres sold for 13,500/acre. 72CSR2
Drained. But needs to be split.

76 acres, 66.10 Tillable 8700/acre.
A little over 10k/acre on the tillable.
No Tile, Farm cut end to end with a creek. And 1/3 of the farm is blow sand.

I thought 7-7.5% interest on real estate loans, and a FED continuing to raise interest rates. Would slow the land market. I think there is to much money in to many hands to see a slump in the market.
This may take awhile for things to slow down.

I’m in the ag lending field and interest rates don’t matter when the buyer writes a check and doesn’t need financing….. Until the farmers burn through the cash/profits and 1031 exchange money is used up land prices will not back up much. Less desirable tracts will be the first to soften.

 

[crietveld]

Pay the banker or pay the tax man is a common opinion in the farming community. This isn’t the 1980’s or 90’s, the farmers that survived have done well the last 10-15 years.


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[northcedar]

Has the 1031 situation changed in the past several decades? I guess I feel like it hasn't.

I also feel like farmers writing checks for farms over say 80 acres is happening way less than people think. Muskrat24, would you say farmers are writing checks for 160's that sell for north of 15K/ac? Interest should slow things down. I'm constantly amazed at how few farms sell every year, even in historic high prices. Kudos to those who hang on to the farm.

 

[Nrharris]

There is an 80 4 miles south of home that sells Friday at a hertz auction. 94.8 csr and on a blacktop road. Farm is flat and black. About as good as it gets anywhere. I will report back if I hear what it brings. I'm expecting somewhere between 22-26k per acre. Absolutely insane.

 

[Handcannon]

The crash will come. Then the banks & government will own the land.

 

[Daver]

Pay the banker or pay the tax man is a common opinion in the farming community. This isn’t the 1980’s or 90’s, the farmers that survived have done well the last 10-15 years.

Correct. ^^ I surely don't know about all farmers, but I know several personally that are as flush with cash at this time as they have ever been in their lives AND they have upgraded their equipment and/or put up machines sheds to the point that there just isn't much else left to spend on.

Translation...some farmers are in a position to write a check and buy land that they want at almost any price. In many cases, it doesn't "pencil out" at this time...but what else are they going to drop their cash on? New truck? Got 'em. New tractor? Got 'em. New UTV? Got two of them. New skid loader? OK, got one of those too. Etc, etc, etc.

Interest rates don't matter when cash is buying.

 

[Daver]

The crash will come. Then the banks & government will own the land.

If people are borrowing to buy at this stage, yes, I agree with you. If, however, they are buying with cash, and many are, then the "crash" will not have that impact much at all.

 

[Hardwood11]

The key that will change the market is corn prices. If they drop significantly…It’s a new ballgame.

 

[IowaBowHunter1983]

Ag land is strong as ever. Rec land has softened slightly. Two totally different animals. The dynamics affecting each are very different..

 

[iowavf]

These aren't farmers who are just starting out buying this land, usually. Most farms anymore are on the larger side and getting the chance to add more land doesn't come along very often and if it's close to their other property, yes they'll pay more and not afraid of the payment.

 

[Hardwood11]

Lots of cash still out there. I expect some changes in 2023, things will get more interesting. Some might have to sell !

 

[deerdown]

Ag land is strong as ever. Rec land has softened slightly. Two totally different animals. The dynamics affecting each are very different..

I think this is what's going on today. I believe most rec ground buyers finance, while more ag land purchases are cash buyers.

I also suspect that the big investors (hedge funds, big companies, top 1%) are buying ag land, not rec ground, and again -and they are probably cash buyers.

So, with higher interest rates, the rec ground gets softer, while the quality ag land market stays strong.

 

[IowaBowHunter1983]

I think this is what's going on today. I believe most rec ground buyers finance, while more ag land purchases are cash buyers.

I also suspect that the big investors (hedge funds, big companies, top 1%) are buying ag land, not rec ground, and again -and they are probably cash buyers.

So, with higher interest rates, the rec ground gets softer, while the quality ag land market stays strong.

100%

So example. 262 acres just came for sale in Madison county, some may have seen it. Sold in 1 day. Cash. $2.6M Buyer you ask? Investment firm that is supposed to be buying ground all over but has struggled to meet acre quotas. This is going to go on for a while.

Rec farms.... none of that. There are people with 1031 monies left, but shrinking IMO, highly affected by rates, and rec ground is really discretionary money. When shit hits the fan... it is not something someone "needs" to have.

 

[8bitnes]

3 tracts sold today at auction, and needless to say the Market hasn't softened.
39 acres sold for 16,000/acre. 83.9CSR2 Tiled and 2 terraces.

72 acres sold for 13,500/acre. 72CSR2
Drained. But needs to be split.

76 acres, 66.10 Tillable 8700/acre.
A little over 10k/acre on the tillable.
No Tile, Farm cut end to end with a creek. And 1/3 of the farm is blow sand.

I thought 7-7.5% interest on real estate loans, and a FED continuing to raise interest rates. Would slow the land market. I think there is to much money in to many hands to see a slump in the market.
This may take awhile for things to slow down.

The most recent Iowa land value survey stated that 81% of Iowa ag land is not financed. Another contributing factor was the build up of cash from record commodity prices and the non availability of machinery due to factory delays. All that cash has to go somewhere, either lower the bottom line or pass it on to uncle Sam in Washington

 

[newfarmer]

The other problem we have- you see some of these contracts for ball players anymore? 10 years, 350 million dollars and such? There clearly is plenty of money out there for a certain number of people... All I want to do is get a total of 60 acres in my lifetime- it may never happen, but it just might as well. Time will tell.

 

[northcedar]

The most recent Iowa land value survey stated that 81% of Iowa ag land is not financed. Another contributing factor was the build up of cash from record commodity prices and the non availability of machinery due to factory delays. All that cash has to go somewhere, either lower the bottom line or pass it on to uncle Sam in Washington

That doesn't mean just land sales not being financed. It means all the land in the state. Land bought 40 or 100 years ago.

I don't think the majority of farmer purchased sales these days are cash. Investment firms and 1031, yes. Maybe IA is different than here in IL.

 

[JNRBRONC]

This article was in the local paper: Will Iowa farmland prices fall?

 

[jflournoy]

100%

So example. 262 acres just came for sale in Madison county, some may have seen it. Sold in 1 day. Cash. $2.6M Buyer you ask? Investment firm that is supposed to be buying ground all over but has struggled to meet acre quotas. This is going to go on for a while.

Rec farms.... none of that. There are people with 1031 monies left, but shrinking IMO, highly affected by rates, and rec ground is really discretionary money. When shit hits the fan... it is not something someone "needs" to have.

I follow the central and southern Iowa county listings close on a daily basis, but didn't see that one on Landwatch, where was it listed? Was it almost 100% high quality tillable? Wouldn't be a crazy price in this market if it's mostly high quality dirt. Or do you think they were buying it with development in mind?

 

[jflournoy]

100%

So example. 262 acres just came for sale in Madison county, some may have seen it. Sold in 1 day. Cash. $2.6M Buyer you ask? Investment firm that is supposed to be buying ground all over but has struggled to meet acre quotas. This is going to go on for a while.

Rec farms.... none of that. There are people with 1031 monies left, but shrinking IMO, highly affected by rates, and rec ground is really discretionary money. When shit hits the fan... it is not something someone "needs" to have.

Definitely correct here. Lots of people who were approved for rec land purchase financing back in January probably couldn't even get approved now with the sharp rise in interest rates. Discretionary purchases are always the first to get cut back. There are still lots of buyers out there for smaller stuff in the 40 acres range, including cash buyers, but you start getting into the 80+ acres range and the pool of potential buyers has shrunk quite a bit since late Spring of this year. That said, demand for good quality southern Iowa (where I'm at) rec land was high already before prices exploded in 2021, and now that demand has shrunk back from the peak a year or so ago, while demand isn't *as* high, there's still plenty of demand for land that is priced reasonably close to the "market" price at this time. Demand for pretty much all of 2021 and into the Spring of 2022 was gonzo and totally out of proportion to a "normal" market, so even though we've come backwards from that, in my opinion seller's still have the upper hand and prices for southern Iowa combo/rec/hunting land are still higher compared to at least the first half of 2021. What happens in the next 6-12 months is a good question.