Can any of you look into your magic 8 ball and give me your predictions on what land prices will do for the next 12 months? Farmland and recreational.

Houses have started to come down, is land to follow?

I know nothing about either but do watch what's going on. My best guess is housing will come down before land.
A parcel just east of Falls City NE sold for $27,500 per acre a couple weeks ago. Losing bidder is/was a Herbster, a politician from Nebraska.
Two days ago south of Auburn a parcel brought $8100/acre. Obviously land is a solid asset as long as taxes can be paid.

Well its only come down because the cost to borrow is so high, not really the lack of demand per say, so maybe stay about the same. I dont really see any type of change in 12 months IMO.

Maybe just a little if someone wants a quick sell.. I have seen housing prices go up and down quit a bit. But It seems land hold steady and trends up. But that's just my limited prospective. Honestly I have no idea.

I'm guessing your trying to decide to buy now or hold off a bit.

A nephew's wife and her brother inherited a 40 acre parcel on the edge of a little town 75 miles from Lincoln and Omaha. A neighboring landowner has always wanted it. They told her $10k/acre or they would list it. She offered them $5k per acre and they sold it for that. Nephew is/was livid but they won't listen and don't want his advice. Greed and the idea of fast money got the best of them. Nothing like leaving 200k on the table plus inheritance tax. It would have easily brought 10k sight unseen. Unreal.

Sounds like he married the wrong woman. Any woman that won't listen to her husband is not wife material. If that husband does not listen to and provide for his wife's needs he is not husband material.

Sad listing it and holding it for a while would have cost them nothing the neighbor would still want in in a year. Yet thay could have doubled their money.

Yes, and she stands to inherit very well from her Mother. A single child to boot.

To many factors involved to give insight. The crystal ball is to fuzzy without some help clearing it. In other words offer more details.

Land prices are stable here. High but stable.

I will never sell (and will haunt my children from the grave if they OR THEIR SPOUSES sell) but am always interested in buying out neighbors. I would therefore like to see a big drop.

Does farmland track commodity prices?

I will predict, land prices will be somewhat stable over the next year. If you are looking to buy, I wouldn't wait, if you have the funding.

We're looking to buy tillabile or pasture. Bank wants 30% down at a minimum which we have but we could not cash buy the whole property.

Yes, no, kind of. Here it's tracked housing more than anything because someone will pay 400k for a 40 to throw a house on. I'm looking roughly up to an hour away to get something more reasonable.

one day at a time higher gas prices more drought everything that makes the dollar worth less if things keep going like they are and even worse yes they will get cheaper but still high if your dollar is worth less

10 years ago if you told me coon would have no value i would have laughed at you

Land appears to be one of the best assets to have. I would buy as much as I could afford. It appears to slowly gain traction over time. I am constantly watching ground myself.

Residential real estate is softening, but recreational/hunting land will stay high and is still selling like hot cakes.

In western Iowa some sold for 30,000$ an acres, 2 million some total for the land

You can not pay too much for land, you can just buy it too soon.

Paying $10,000 an acre with a 7% interest loan is not something I can do. For the land to make sense it must make CENTS, I'm not going to farm myself into the poor house and make my wife go through that stress, I've saw it to many times.

If I can find something priced reasonably I'll buy it, if not I'll invest elsewhere.

I could double or triple my money on my farm and have thought about it and moving somewhere with a lot less people. Then I price land in those states and change my mind.

What else besides ammo can you invest in that won't loose value?

Myself. I'll buy more equipment and expand my business or create new ones. I had enough to buy a good chunk of land but had to restart after I was divorced now I would have to finance some of the land and at 7%+ that's something to seriously factor in.

I recently sold mine for about $110,000 per acre. That, assuming it actually goes through.

It is for development, and "an offer you can't refuse".

On the one hand I would like to stay rather than sell.

On the other hand, I ain't so sure I would get along with 600 new property owners squeezing me from two sides.

Here in southeast kansas deer hunting ground is selling for more than farm ground. Last month 78 acres 5000 per acres. Farm ground 2500 per acre.Out of state deer hunters from everywhere are driving this price up.

where you relocating to?

Same in SE Nebraska Len. Normally useless tree-covered hilly rocky land selling for big bucks for hunting big bucks.

I think tillable farm land will go up still. Many of the farmers by me are tearing out fence rows, pushing wood lot edges back and running tiles in ditches and filling them in, to gain more land for crops. Crop prices are high and likely to go higher driving farm land prices up.

Keith

My take, and I'm no expert although I have a successful radio show with poor ratings lol. The only way land prices will come down is if the bottom falls completely out like the great depression. Other than that, if you don't already have land or can't afford it now you better find Robinhood and join the merry men.

How many acres was it. That's the driving force behind some large amounts per acre.

Talked to a very wealthy guy I know just this week. He owns several large businesses and a LOT of land. He said the first or second quarter of 2023 is going to be about like 2008. He said he's ready for it.

2021 - $500,000 @ 3% x 20 years = $2,772/month
2022 - $500,000 @ 7% x 20 years = $3,876/month, or difference of $1,104 per month, or $264,960 over the course of the loan.

ol' dad

100+ year trend line for ag land is real close to a 6% annual increase trend line. There have been periods when actuals are above or below the 6% trendline. I think the last few years with low interest have pushed us above the trend so my QUESS is we will se a few years of stable or slightly lower prices with no major shifts. Unless The present administration pulls a Jimmy Carter and pushes interest rate to the teens. Then we will see another major correction, I think the late 70's early 80's seen some land prices drop close to 50%. U of Mo has a good article on land price trends. If your serious look up this article.

Too early to tell. The window for closing has a one year window from June 2023-May 2024. The only places ruled out are Hennepin County, MN, and according to the old lady, anyplace that don't talk American.

It might be thought of as acres today, but it is already on paper as lots within a city block

Stable to increasing. Too many people with cash, don't care about a return, any return is fine, will pay more than a return brings.

Friend of mine, his son is high up in an ag lending bank. He says interest is going to 15 by end of 2023. If that is accurate, things will slow down but there is a ton of cash out there. There have been a couple "no sales" out here, which was common in the 1980's, but uncommon know. Is this the beginning?

Imo, yes. But I'm not like some on here that are worldly smart. I know my neck of the woods and 2008 wasn't a bump in land prices, the housing market yes. 1981 or so didn't come close to 1929. The recession in 81 made things uncomfortable, I know my family had to adjust. I personally think we are headed for worse than 29 and I hope I'm wrong and there's a good chance of that lol. I hope some of the in the know, heavy hitters in finance chime in.

Here in Ohio land is priced at $10,000 per acre.
Land with special or unique features costs more.
A house and buildings adds to the cost.
Outrageous!

I priced a small piece of mine last month for $50K/ac

Really hoping I didn't price it too low.
But it has been long enough that I can tell them I am no longer interested in selling

My son told someone the other day, "we don't sell land or guns"

I have probably bought everything around me that I ever will but if I can make numbers work I would buy more

I’m an appraiser by profession. Around here rec and farm ground will likely see little, if any, decrease. The owners with land to sell, don’t have to. They can ask whatever and just hold it if they don’t get their price. Residential land could see a decrease. Individuals or smaller developers who were hoping to build but can’t now that interest rates are up, and they also can’t hold on for the rates to come back down. Just my guesses though

Iowa set a per acre record a month ago, and then topped it again this month. 26250 and 30k per acre. GRANTED we have some of the best farmground in the world, but I think its insane. BOTH were like less than 80 acre fields. Probably just 2 ole boy farmers showing off to one another

Yep, same in SE Nebraska. $27,500/acre and the losing bidder was a politician from Lincoln. Herbster.

A lot of farm land or any land was bought with cash over the last couple decades so interest rates were not a major factor for many sales. What higher interest rates do is remove a lot of potential buyers that can not pay the higher prices and use borrowed money. That makes the land prices for the cash buyers lower for them also. Huge range in land prices in our area with needing land to feed dairy cattle and apply manure according to the regs.
Land is for many a long term investment. Land makes a good diversity investment for those that have monies invested. Just buying a 40 at 8k per acre hoping that you will double or triple your investment is a stretch and also one needs a lot of monies to buy the original 40 unlike buying shares of stock or shares of mutual funds. You can start with almost nothing in todays land market that is not the case.

Bryce

No expert either. But out here the 80's were a big deal with interest as high as 18%. Wiped lots of guys off the map. The big guys got bigger of course picking up land from the bank or on the courthouse steps. Many land auctions at the time, quite often the auctions had no sales because they couldn't get the minimum bid. Lots of land changed hands after a no sale auction for 50-75% of the auction minimum. I don't think we're their quite yet, but if drought continues? It could get ugly fast.

A drop in prices will take Mother Nature and a really hard drop in the economy. People that do not have to own land (make a living) would need to make decisions in order to keep up with their standard of living.

They can pay that for land because they cost average all their land, most farms are generational and most farms are passed down. Now if property taxes were based off of value, say one percent, prices would go down.

This is correct. And as far as property taxes that is a whole nother story. Most people do not realize that ag land is already assessed at a much lesser rate than residential or commercial property. Further, assessors base the assessed value off the soil productivity rather than it's actual market value. For example, these farms you here selling for $20,000 an acre are probably only being assessed based on a market value of a few hundred dollars per acre. As such, farmers are really getting a huge break on property taxes. I understand this may be necessary to keep food prices low so I'm not necessarily for or against it. But combined with other government subsidies it does make a non-farmer business owner a bit jealous.

Ol dad

Spot on as always!

Ol dad

Refinance when interest rates drop and then you won't be paying 7% over the course of the loan. I have seen this movie.

you think the people in arizona that are running out of water and ranchers having to sell off cattle is seeing higher prices i wish i would have taken the money i spent on my place 50 years ago and put it in guns i would be very wealthy today and a lot less owner expenses and up keep like i said one day at a time

That is exactly correct but a lot of people who borrow money can't cover the debt service right now with interest rates as high as they are. Two things have to happen either real estate prices come down or interest rates drop. Cash buyers are waiting for deals right now which haven't happened yet. If interest rates don't start to fall you're going to see values declining. Exposure periods are already increasing and list of sale price ratios are starting to widen.

Ol dad

I did tax work and financial planning for farmers for a bit over 30 years. Yes the taxes paid on bare farm land or ag land is extremely low in WI compared to recreational land or other property. This has shifted the taxes to schools, roads, volunteer fire departments, security etc. to home owners and owners of recreational land. I don't know the exact figures now but a person who owns say a wooded 40 for hunting that sells for 3K will pay 2 to 3 times the owner of an ag 40 that sells for 9 K. I think we will see some stabilization or actual drop in land prices arouond our area due to the fact that farmers here are dairy farmers and have huge investments in cattle, buildings, machinery, equipment and feed and manure storage and therefore much more likely to carry considerable debt to be able to own and operate these larger farm businesses.

Bryce

Here I think prices will stay about where they’re at we have a small group of people with a lot of money and are investing in land and they don’t seem to be slowing down and they bid against each other, taxes here are rising like every where else.

North Central WI, Auction and old gent passed his farm land sold for $4250.00 acre that is crazy for our rocky, swampy and but this was pretty good stuff. Still way high by our standards. Buy Dirt God ain't making nay more of it!

Roadside timberland in my area is being harvested , then subdivided and sold for $3000- $5000/ acre. No shortage of city recreationalists who own a snowmobile or ATV. My real estate agent friend , told me, the 1st question asked, is where is the ATV/snowmobile trail ?

We bought lakefront and because the seller at the time was "overwhelmed" by offers in the first 12 hours that the property and house were on the market, the seller adjusted and announced it was "cash buyers only." That cleared the field by 95% we were told. And the bidding began in earnest at that point. For a mere 24 hours before the seller accepted.
People are financing more than they belly up with cash, so these higher interest rates will have an effect as intended.

We baby boomers are where the majority of this nation's wealth resides and cash is king right now.
I'd like to buy some more land around us, but I'll wait a spell.

Some land goes up. Some goes down. And we move to acquire in those conditions.

Blessings,
Mark

I appreciate all the input. At over 5,000 a ace tillable does not make sense here I'm most cases, this ain't Iowa farm ground though some are willing to pay like it is.

If only land was $5,000 per acre in my neighborhood. I would be in hog heaven.

How much will that land cash rent for? $150/acre or higher than 5k is worth it.

Ol dad

Most of its over 5,000 an acre, some far over. We don't have great ground here, lots of gravel and hills with gravel.

Let's say I did find a 40 for $5,000 a acre. Put 33% down and financed $133,333 @ 7% interest over 15 years. $1,200 per month payment for $14,400 per year payment. In 15 years I will have spent $280,000 plus taxes and received $90,000 in land rent, not even enough to cover the interest and taxes.

Now let's say the next 15 years land rent averages $250 a year, that's $150,000 in income over the next 15 years meaning I still would not be broke even.

I would be 70 years old by the time I broke even roughly. Of course the land would be worth more presumably, say $15,000 a acre or $600,000. If I sell the govt is going to take a huge chunk of that and I'll have maybe doubled my money in 30 years. If inflation stays around 2-3% I'll have made around 2% a year.

It has to make cents to make sense and current prices do not make sense, they are speculation

Donner it has not made since in years. And I thought It would correct and it just keep climbing. I bought our farm 6 years or so ago and can triple my money or more. But I couldn't replace it so I will keep it.

Most of its over 5,000 an acre, some far over. We don't have great ground here, lots of gravel and hills with gravel.

Let's say I did find a 40 for $5,000 a acre. Put 33% down and financed $133,333 @ 7% interest over 15 years. $1,200 per month payment for $14,400 per year payment. In 15 years I will have spent $280,000 plus taxes and received $90,000 in land rent, not even enough to cover the interest and taxes.

Now let's say the next 15 years land rent averages $250 a year, that's $150,000 in income over the next 15 years meaning I still would not be broke even.

I would be 70 years old by the time I broke even roughly. Of course the land would be worth more presumably, say $15,000 a acre or $600,000. If I sell the govt is going to take a huge chunk of that and I'll have maybe doubled my money in 30 years. If inflation stays around 2-3% I'll have made around 2% a year.

It has to make cents to make sense and current prices do not make sense, they are speculation [/quote

If you have to finance land then no after you pay interest it's not going to pencil out. There are not very many low risk real estate investments that will if you have to finance them. In general the average expectation for return on cash renting ag land is 3% per year. It's not uncommon in the market I live to see a knowledgeable buyer purchase it at 2.7%. It's relatively low risk with minimal holding cost. If you can find a good tenant farmer that will pay you $150 an acre at 3% return that equates to $5000/ac value. (150/0.03=5k). Compare this to say commercial real estate like an office building the annual rate of return right now is around 8 to 8.5%. but you have much higher risk and more overhead such as higher real estate taxes, insurance, maintenance and repairs, common area expenses, etc.

You're not going to get rich from buying agland but it's a relatively safe investment and if it has some recreational opportunities that is worth something also. And depending on where you buy it at, 20 years from now it may have a different highest and best use such as commercial a residential development, so the reversionary benefits may increase your overall rate of return over the holding period.

There are a lot of rich farmers that were poor 30 years ago because they lived 20 miles from the city and had marginal soils. Now they are the city.

Ol dad

I don't disagree with any of that Ol'dad.

I appreciate everyone's input, ill keep checking this thread and probably try and make a new one after new years to keep gaugeing opinions.

If you can find tillable land down there for $5,000 an acre jump on it.

Of course it's not Iowa farm grown, if it was it would be triple or quadruple that

I can't and that's kind of my point. Even at 5k it doesn't pencil out much less 7k.

An hour south or an hour west of here is great heavy black soil, we're in the st cloud area sand pit

How much is land rent down there?

Don't just look at leasing to farmers but also hunters for additional Income. Land will only go up overe the next decade so the value will increase. We both missed the boat on the low interest rates. I want more but don't want the debt. I was blessed and was able to pay cash when I bought the farm.

125-200.

Depends on the field, size, hills, etc. If you want a consistent decent crop you need irrigation here.

Are those land rents per acre you quoted for your area with or without irrigation? Same here as to rental rates, field size, hills or not square fields, distance to farm due to hauling weight heavy forages and liquid manure but the rats are 160 to 320 with most around mid 200s. We have a neighbor farmer who has some lighter soil so he as dug 3 ponds and irrigates about 150 of his 1200 acres. It cost him about as much to irrigate those acres as to buy an additional 80-100 acres as his yields went up by about 40%, especially alfalfa.
We are about 60 miles or so north of the better growing areas of WI. Our better farmers, say the upper 1.3rd will average about 170-180 bu per acres on an averge to good year on all their acres. When it is wet in our clay planting gets delayed and the ground stays cold and gets hard. Due to the need for forage and manure we probably pay a bit more per bushel of yield on rent. Averge rents at $250 with 170 bushels per acre is about $1.5 per bushel for rent.

Bryce

Lots for new home construction will be, and are coming down in price. Other types of real estate that people don't generally finance will correct a bit, but since those types of buyers are usually cash buyers I doubt there will be as much of a drop. I'm talking larger acreage parcels like timber land, bug-out properties, etc..

Irrigated would be 250+. I want to farm, ide like more ground, I just don't want to work 80 hours a week to be able to afford to farm another 20 hours a week.

As Mark said, depending on the current economic conditions, cash can be king and put you in the best position.

When we make an offer to buy land, we use a buyer’s realtor to keep everything professional. We supply terms to our realtor. We very clearly state our terms, say they are not negotiable, and say the offer expires at 4:00 pm the next business day. We include that a check for earnest deposit will be delivered to their realtor’s office no later than 4:00 pm on the day following their acceptance of the offer. Closing within 10 days.

Our offers have won out over offers of much more money which was conditional upon a home sale or financing approval.