Texas | swne - 7/21/2016 07:06 Long term interest rates are very low. Until those rates move up which I don't think will happen any time soon land prices will be propped up to some extent. We have already seen about a 20% drop in land prices around here but seem fairly stable for now. Interest rates in the 80's were killers for land prices.
I agree on the difference in interest rates and I sure don't see a return to the rates we saw in 1979-80. I do see interest going higher soon as that is what it's going to take to free up more capital.
The big difference now is the low, low margins. Farmland, and I mean strictly farmland.... not development land, is going to have to stay in line with the potential return on the investment. It has far out-paced that the last 3 years....... all because of a short and un-sustainable run up in crop prices, particularly corn prices. Land sold and was leveraged which locked it off the marketable list. As land comes available going forward, it won't sell at those same prices, making the overall land values drop to the level that it is once again marginally affordable. |
Thoughts on crop land values
