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NW Indiana | So with any market there is always the psychology of what something is worth. Take the stock market, after the fear of the Great Recession in the early stages we were putting a P/E of 14. Now that fear has subsided we have priced things around 20x. That is a huge difference in value.
So on to my land story I remember in 2010 ground was selling for around 4-4500k/ac in my area. Come fall grain ran up to $6 and we had an auction. The piece brought 6k and everyone was blown away, obviously the buyer was crazy. About 3 months later a really good piece went for sale in a big money area. It brought 11-12k(don't remember exact)on a bidding war. Suddenly the 6k guy was a genius and everyone valued there land at 7-8k.
Point is grain prices didn't change drastically during that short period but the psychology sure did in a hurry. So my question becomes can it do the same thing on the way down? Take the indicator 1 example below, many probably would have valued that ground at 9-10k and it brought under 7k. So can the psychology of others in the area suddenly say I'm not paying 9k for this when they just bought that for what they did?
It might not happen with one sale but if a bit of a trend starts it might amaze how fast it takes hold and spreads across the belt. I've seen it before so I believe it's possible to happen again. Psychology is a powerful thing. | |
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Psychology of land values
