AgTalk Home
AgTalk Home
Search Forums | Classifieds (159) | Skins | Language
You are logged in as a guest. ( logon | register )

Psychology of land values
View previous thread :: View next thread
   Forums List -> Market TalkMessage format
 
senodak
Posted 2/16/2018 12:14 (#6582094 - in reply to #6579946)
Subject: RE: Psychology of land values


It's more psychology than economics sometimes. Prices are relative to history and provide a degree of comfort independent of actual economic factors.

Take for example bitcoin. When it dropped from 18,000 to 12,000 it suddenly became a "good deal" because it had been to 18,000 and the human mind would tend to think it should go up again. But reality is it could go to 0 or 100,000. The market doesn't HAVE to do anything.

Land is not different. Someone could have offered you a piece of ground 5 years ago for let's say $4,000 acre. You might of thought it was too high because nobody has paid that much for land yet. Maybe the economics of the transaction (grain prices, interest rates) even looked better at that time. Fast forward 5 years after there have been higher land sales and the grain prices are lower and the interest rates are higher. Even though the economics are not there anymore the psychological effect of having prior sales that have been higher adds comfort where before there was none.

And it goes the other way, too. If you have been looking at any particular product to buy, and all of a sudden you see one advertised for a price that is "too cheap". You will second guess yourself out of the transaction because the price is not in line with recent sales. The recent sale price has more to do with the psychological comfort of the buyer than the actual underlying economics.
Top of the page Bottom of the page


Jump to forum :
Search this forum
Printer friendly version
E-mail a link to this thread

(Delete cookies)