The Next Real Estate Bubble: Farmland N/C

[KSanburg]

I found this article very interesting not to say that I agree with everything in the article but some insight to the folks that live out west where farm ground took the hit with the housing bubble, and I thought folks that live back in the Midwest might have some opinions. I believe it could have far bigger impacts on our country than anyone might think.  Here is the link.

http://www.american.com/archive/2013/march/the-next-real-estate-bubble-farmland 

 

[mark tenenbaum]

Very well written article-but the effective cost of money is so low that a farmer can probably control  the same amount of income producing ground or more-than when land was cheaper and interest rates were 10% or higher.Im probably gonna get slammed-but as long as the demand for crops remains strong-AND DUE TO THE FACT THAT THE US AND CANADA ARE APPROACHING energy production in amounts to drive DOWN THE PRICE OF OIL-(and being very close to eliminating foriegn oil dependency)THAN the value of FOOD-will allways outwiegh the value of CRUDE-and I love the fact that our farmers are the ones that are ULTIMATELY gonna send those rugbeeters to thier knees. If they wanyt to go back to the stone age-then they can drive thier Mercedes out in the desert and start a garden patch in the sahara desert O0

 

[knabe]

If you want to see a bubble, try competing with silicon valley money, old and new for rangeland.

 

[mark tenenbaum]

If you want to see a bubble, try competing with silicon valley money, old and new for rangeland. ///  (clapping) (clapping)-Theyll buy it just to take pictures for thier yuppie friends O0

 

[comercialfarmer]

Many people, not just farmers are looking for a safe place to stick their money since the world's economy is so questionable, we're competing with doctors and lawyers.  May be a lot safer than the bank if you look at what's happening in Cyprus. 

 

[mark tenenbaum]

Many people, not just farmers are looking for a safe place to stick their money since the world's economy is so questionable, we're competing with doctors and lawyers.  May be a lot safer than the bank if you look at what's happening in Cyprus.  /// I know that-but what are they going to do with the land??? Guarantee that you can lease-run croplands or pasture areas for less outlay than you can buy it :what are a bunch of yuppies in earth shoes gonna do with the ground after a few years-there has to be a differance in the huge commercial farm entities and the rich doctor with 8-900000 to spend who escews the simple life from a distance-otherwise the only way they have to invest is through large REIS and that kind of thing-they arent connected at all to the ground-in that case-WAIT TILL SOME OF THEM FALL DUE TO TOPHEAVY OVERHEAD-and come to the auctionsO0

 

[Limiman12]

Just gonna say I AM  a doctor in my day job, and big farmers around here have more buying power then I do!  Hobby farmer now, full time chiropractor.  Would not mind switching the two if I could.

 

[mark tenenbaum]

If the drauths keep hammering you might have some buying power-when the ag-llc- card houses start to fall-Knabe may have been referring to a different group of buyers-Silicon Valley yuppies who buy huge parcels of rangeland and then do ? with it-other than maybe let the indigeneous opoulants pay a little to run cattle-or worse-hunt on the properties O0

 

[comercialfarmer]

Just gonna say I AM  a doctor in my day job, and big farmers around here have more buying power then I do!   Hobby farmer now, full time chiropractor.   Would not mind switching the two if I could.

Most producers have a primary job other than farming or cattle production, not knocking any trade in particular.  What I was referring to, are professionals that aren't in production but looking for a sheltered investment only, with no intentions of being productive.  Some use it for hunting and rent the land out, we rent quite a bit like this.  Others, like a guy I know, just bought a section just to have and plans to do nothing with it. 

There is added competition for buying that is not dependent on the land paying for itself.  It is more like a summer home than anything.  That is hard for a business to compete with.

 

[chambero]

Land has almost always cost significantly more than its "worth" from an agricultural stand point, especially for cattle ranching.  The current situation is nothing new.  It's much worse the closer you get to large urban centers (almost anywhere in Texas except up in the panhandle and west Texas), in areas with outstanding hunting (large parts of Texas or the mountain states), or in areas with spectacular scenery (like Mtnman deals with in Colorado).

Where I think things may change is when the current generation of landowners (largely 70+ year olds in our area) start dying off in large numbesrs.  Historically, the next generation has been interested in continuing ranching/farming and so most places are kept in the family.  That's not the case anymore.  First of all, even if the "next generation" had an interest at one time in keeping it going, their parents are living so much longer in better health than previous generations that they pretty much had to give up those ambitions and go get a "city job".  I can count on one hand (slight exageration) the number of people in my age class in my county that have an interest in raising cows and anything approaching the wherewithal to do it.  There's plenty of flunky "cowboys" around, but those guys are never going to buy/lease land and buy cows and feed them.  I think in the next 10-20 years there will be a vacuum of people wanting to lease land for agriculture - particularly cattle land - compared to the amount of land that will be available lease - either by the doctors/lawyers buying it (there are only so many of those guys) or by city-dwelling 40-50 year olds that finally inherit it.  I don't think there will be a price crash - at least for a while - because those inheriting the land just won't sell if they can't get what they think its worth.

Land ownership still represents power and control in this world and don't ever think for a second it doesn't.  That in and of itself will keep things from going bust.  You have to be able to survive the short-term if you buy land and pay for it with income from somewhere else; however, how many of you wish you could buy land now for what your parents could get it for 20 years ago?

 

[mark tenenbaum]

Well put Chambero-having been a builder before the crash-I guess its like buying a 3 million dollar building lot (knock down house0 in LA LA land or spendinding $500000 of play money on some rough ground-most of those buyers are not making a business decision-nor is the property geared that way-income from something like that probably isnt in the cards-and the tax benefits are pretty much non-existant-wish I could by a quaint piece of ground and try to get some of my cattle baclk LOL O0

 

[comercialfarmer]

The population growth with or without illegal entrants would be enough to add pressure.  There has been a decline in the number of farmers for decades.  However, with technology, we don't need as many farmers.  One can farm the ground of 3 or more farmers, 40 years ago.  Look at the massive tractors available now compared to the 70's with JD 4430 or IH 1066.  Then look a few decades back from there and what was in common use.  We are a long way from the model A.  Our 65 Massey is still functional but it would take me 2 weeks to do what our current equipment will do in a day.  Now add in pressure to have a place to get away from elbow to elbow people and that is worth a lot in its self.  Then consider the value placed on hunting today, when I was a kid all you had to do was ask.  Now you have to have a lease, or pay for a trip or compete for public land.  Self sufficiency fad is driving more competition as well.

Not saying there won't be ups and down in the market, but I don't think the down side is going to be nearly as strong as the up.  Really hope I'm wrong, but I don't think it will be the case.   

 

[knabe]

would love to hear president so and so say, "for too long, presidents have worried about their legacy with respect to setting aside national parks, national forests, taking land out of production.  well folks, i'm going to do the opposite.  for too long, your federal government has not been able to take care of the land it has, we hire too many peole, have to pave too many roads, do too many studies to protect species that don't need protection like the buffalo.  it's pretty clear private industry has done a great job with the buffalo, so immediately, i am removing the subsidy for buffalo, who's main benefactor is ted turner and a few environmental groups and the federal government is going to systematically auction off some land to the highest bidder.  we will also consider selling land within national parks with some use restrictions.  it's time for a real change instead of the same ol fake change that only increases the size and scope of our federal government.  we are making individual business people extinct at a more rapid rate than polar bears.  it's time for a change, change you don't have to believe in, just be a part of."

 

[chambero]

Knabe - I vehemently diasagree with you on public land.  There's a real value to those that dont have enough money to buy land to still be able to go somewhere and just take off - be it hiking, hunting, fishing, or just sight seeing.  It is an important part of being American and not European.  Maybe someday we'll be crowded enough to need to maximize production on that land, but we are a long way from it right now.

 

[knabe]

Out west, the government, state and federal, own 50% of the land.

I'm not suggesting selling Yellowstone and Yosemite.

But a national park like pinnacles is ridiculous.

The land that all the government wild horses are on Shoukd be sold as Shoukd all the wild horses. Those that don't sell Shoukd go to slaughter.

The people that manage that program should be redeployed.

There is plenty of national and state park land available to walk on and massive acreage that is not parkland that no one will ever hike on that the federal government Shoukd not own. They should be realizing revenue from it in the form of property tax and development.

There is nothing to be vehemently against selling land that no one will ever visit.

 

[comercialfarmer]

Knabe - I vehemently diasagree with you on public land.  There's a real value to those that dont have enough money to buy land to still be able to go somewhere and just take off - be it hiking, hunting, fishing, or just sight seeing.  It is an important part of being American and not European.  Maybe someday we'll be crowded enough to need to maximize production on that land, but we are a long way from it right now.

Knabe - I vehemently diasagree with you on public land.  There's a real value to those that dont have enough money to buy land to still be able to go somewhere and just take off - be it hiking, hunting, fishing, or just sight seeing.  It is an important part of being American and not European.  Maybe someday we'll be crowded enough to need to maximize production on that land, but we are a long way from it right now.

Wholeheartedly agree that some public lands are truly national treasures.  Almost nothing I enjoy more than elk hunting in the Rockies, an all around great experience.  But I have a problem with my state using money from hunting permits to fund purchase of private land on about a yearly basis.  They don't need to own the land.  There is a ~ 80,000 acre wildlife area managed by the state for a lumber company.  Something like a $5 fee will give you a years worth of access to hunt, camp, ride horses, even ride atv's, etc.  Great idea.  Great use of the land. 

I love the walk in hunting access of Kansas and few other states on marked property.  Keep the land in private owners hands, keeps the land productive and everyone else that wants to can still enjoy hunting on over a million acres.  Fabulous idea, I wish we had that in Oklahoma.  For something like $80, I can hunt millions of acres throughout Kansas. 

It's time to get creative.  Most problems can be solved, but the right questions have to be asked.  And you can't ignore the outcome of failed policies.  It is time to look at the financial health of the states and copy the ones that are succeeding and flush the ones that are failing. 

 

[knabe]

Wholeheartedly agree that some public lands are truly national treasures. 

key word "some".  not all.