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Very southern Mn | Land could go up or could go down. Look at price of gold and silver. There is no actual return other than the price adjustment. Land has been a much better investment.Will it be in the future, who knows? Stock market is lead by stocks that most would not have been recognized 10 years ago. If you break down a lot of stocks you would see their price to earnings make land look cheap. Is a AI stock a better investment, maybe, maybe not, only future will tell us. AI may be a great investment but you pick the wrong stock. You hear stories all the time if you had bought a certain stock how wealthy you would be today. I personally don’t know anybody that bought apple or Amazon stock at any volume at the very beginning and still has it today. I know a lot of pretty wealthy farmers that invested in land. It can be also a forced savings plan. If you realized how much money gets taken off the top before shareholders got paid on these companies or funds they don’t look quite as appealing, especially if they have some pitfalls along the way with the big fees being taking off the top. I am in no way against investing in stocks and some people have been very successful and also somewhat jealous that people can move anywhere and keep their investments that has most reasonable tax rates etc. I would also argue that owned land with all improvements done, tile installed, longer term fertilizer plans is usually your best yielding ground. ( some of us have been blessed with some great landlords that give us the comfort zone to invest in those long term things without fear of having to compete every year to keep a farm, which benefits both tenant and owners)
As far as a big reset in land prices it could happen. Could stock market have a big reset? Is your guaranteed pension really guaranteed? The situation in the 80’s was some crazy borrowing that created a huge bubble as did the housing crisis in the 80’s which almost exactly mirrored the farm crisis. Land as a whole probably has lowest debt to value in many years. Actual interest rates are around or below 6%, some institutions are paying back almost a percent back in dividends every year. Will that last, probably not but every year they do make quite a difference in actual interest payments. You are allowed to deduct the interest so actual rate would be dependent on your tax rates. As much as I dislike government programs, the young farmer program has some pretty good interest rates if you qualify. You also should add some kind of inflation factor of 2-3% which has been pretty historic over time. So you could make a pretty good case historically that return is closer to a 4 or 5% return.
Finally the guys that are waiting for lighting to strike when the day comes for land to come down to when they have the money and nobody else does. I watched in the 80’s as the smart money waited for land to get cheaper and than watched it go back up. I will agree that some of more distressed land has probably fallen but best land here is not off very much at all. Is this time to buy land, absolutely no idea. I just throw this out there as it seems everybody knows exactly what is going to happen.
My biggest concern right now is the ultra left like in New York or Portland or for that matter Minnesota on what they do with our property rights and future taxation. Land buying is different for everyone. I posted this only to give some opposing thoughts, not saying land should be bought or sold.
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Buying land economics
