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Crazy Land Auction
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BlueRonin63
Posted 4/17/2024 08:29 (#10709807 - in reply to #10709781)
Subject: RE: things were a little different this neck of the woods


The cycles have something to with life span. The cycles repeat when enough people are gone from the last cycle.
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Stormwatcher
Posted 4/17/2024 08:37 (#10709823 - in reply to #10709403)
Subject: RE: Crazy Land Auction


WCMO-SWMO Area
Reality speaks - 4/16/2024 21:13

so why did those guys in 1982-1987not jump in and buy up all of the ground that the lenders were trying to dump? Maybe they did the math and realized that their CD earning 9%+ was better than farm ground at 3% return and actually losing value. And they weren't making anymore land back then either.


In my area we had 7 bad years in a row starting in 1980..Lots of us grew practically nothing in 1980 due to drought and extreme heat..If it wasnt drought it was floods plus the high interest.....1981 and 1986 were as wet as 1980 was dry..Crop insurance didnt amount to much so that sure didnt save anyone..I lost lots of neighbors in the mid-late 1980's that had all bought land in the late 1970's....I sure went to lots of bankruptcy sales..A few got write downs and they are all huge farmers today...Even the farmers that were in good financial shape barely made it and they werent buying any land in the 1980's...They were just trying to hang on and pay back loans...Land bottomed here at about $500 per acre in 1987...It took until the early 2000's before it saw $1,000 per acre again like it was selling for in 1979-80...I bought 80 acres from Mom in 2006 for $1,000 per acre and right after that land prices took off and now it's in the $5,000 to $7,000 price range.

Edited by Stormwatcher 4/17/2024 08:44
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Kooiker
Posted 4/17/2024 08:42 (#10709833 - in reply to #10709807)
Subject: RE: things were a little different this neck of the woods



BlueRonin63 - 4/17/2024 08:29 The cycles have something to with life span. The cycles repeat when enough people are gone from the last cycle.



Yep, it repeats when the people that saw it/lived it the last time are no longer around.    The guys that were really hit hard by the 80's are getting fewer and fewer at a steady rate.


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deereman
Posted 4/17/2024 08:43 (#10709836 - in reply to #10709011)
Subject: RE: Crazy Land Auction


NE SD
Most guys 50 or older remember it well. I know I do. If you were unlucky and bought land at the wrong time in early 80s you most likely are not farming that land today.
Or at least you went through some very tough years making the payment.

Edited by deereman 4/17/2024 09:41
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Spanman
Posted 4/17/2024 08:49 (#10709847 - in reply to #10709770)
Subject: RE: Crazy Land Auction


So the basis for your guys’ argument is a 2-3 year stretch from over 40 years ago as to why buying land right now is the wrong decision? Really that’s all you got?

I’m just trying to learn here not trying to demean just so you know……. Go back 100 years and is there any other timeframe other than early 80’s? If that’s the case I’ll take my chances.
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BlueRonin63
Posted 4/17/2024 08:50 (#10709848 - in reply to #10709777)
Subject: RE: things were a little different this neck of the woods


I thought ROI always covered Net income/year plus appreciation. Land I bought around 1994 for $1250/acre is now worth $11,000+/acre according to the tax lady. That's more than 3 doubles in 30years. That's a double every 10 years. The rule of 72 says that is a 7.2% rate of appreciation. Add that to your yearly net income and land looks a lot better, I will put the Classic disclaimer on: "Past results do not guarantee future performance."
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SodbusterIII
Posted 4/17/2024 09:07 (#10709874 - in reply to #10709848)
Subject: RE: things were a little different this neck of the woods


Managing your farm when land doubles every ten years is easy, depreciate land for 5 years and then people find out who can figure out things.

Mike Tyson always said -- Everybody has a plan, Until they get punched in the face
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reformedbanker
Posted 4/17/2024 09:30 (#10709902 - in reply to #10709634)
Subject: RE: Crazy Land Auction


Reality, you, and many others bring nice thought provoking comments that I like reading. I enjoy seeing other people's logic and viewpoint.

A lot of really good discussion above. I am wondering if anyone here is starting to become more confident that CI scores will end up being the next thing to get capitalized into land values. I am getting there. For example, if the local ethanol plant is incentivized with credits for every decrease in CI score, will they pay more to farmers with lower CI scores? Who will administer / verify all of this? A lot of questions but I somehow think this man made transfer of payments system will end up being capitalized into land values - or possible keep them higher than they otherwise would be - which means maybe not fall as much as they otherwise would have.
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Big Ben
Posted 4/17/2024 09:50 (#10709939 - in reply to #10709579)
Subject: RE: Crazy Land Auction


Columbia Basin, Ephrata, WA
Excalibur - 4/16/2024 23:21

New standard is Deca-millionaire. Pretty sure that crowd and above gained, while others are left in the dust. A Deca millionaire most likely saw a 40% increase in wealth and has the means for new vehicles, groceries and such. It will take time to burn up/invest $4 million in capital.



It’s not like someone cut them a check for another $4 million, most of the time that increase in wealth is already invested, that’s how they gained the wealth. It’s just the dividends or the proceeds from sales of other investments that they have to spend now.



Edited by Big Ben 4/17/2024 10:06
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BlueRonin63
Posted 4/17/2024 09:58 (#10709947 - in reply to #10709874)
Subject: RE: things were a little different this neck of the woods


I have been on both sides of it. Land tends to fall fast. Like 1920-1925 and 1982-1987. I was starting in the 80s so I know that one. Growing up my dad always talked about the 1930s being so hard but if you study old abstracts or read much history Ag crashed in the 20s when the rest of he economy was roaring. The reason I point that out is my best guess is we have 30years to the next drop.
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Excalibur
Posted 4/17/2024 10:12 (#10709966 - in reply to #10709939)
Subject: RE: Crazy Land Auction


SC WI
Correct, however most businesses saw inflation in value and revenue(dividend), saw percent debt shrink. They are reinvesting most of it, that’s why investments like land are at record highs and will take a while to level out(for investors to slow down). There was also a lot of emotion in play the last couple years, to borrow and invest because things were inflationary. That emotion also need to return to normal.

ETA: Last couple years most investors were after appreciation, one things level out they will look to sell and move inventory into more favorable returns.

Edited by Excalibur 4/17/2024 10:15
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dt4020
Posted 4/17/2024 12:29 (#10710131 - in reply to #10709011)
Subject: RE: Crazy Land Auction


Fairbury, NE (Southeast)
That would be a realistic assumption.

The reality is there is odd situations where a logical price gets thrown out of wack. Hunting ground and land that borders two operations that "have" to have it come to mind.

Cash flow means absolutely nothing.

If the attorney/MD/entrepreneur/etc has the cash it will be bought. This is becoming more common locally.
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Red Paint
Posted 4/17/2024 12:41 (#10710146 - in reply to #10709724)
Subject: RE: Crazy Land Auction


SW “Ohia”
piperfarmer - 4/17/2024 07:41

NoTillFarmer8230 - 4/16/2024 21:49

This is absolutely true. The only thing worth anything will be food, bullets, and medicine. Even gold would become worthless at some point because you can’t eat it…


Cite example where Gold was worthless in the last 3000 or so years


It’s already been banned from public trade once, easy for that to happen again.


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Tiler
Posted 4/17/2024 13:07 (#10710177 - in reply to #10709756)
Subject: RE: Crazy Land Auction


SCIA
This IS more like 81, than 14.
52 year long wave high should be in 28 +- 5 years.
Average drop, from cycle high is 45%
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brad c
Posted 4/17/2024 13:58 (#10710223 - in reply to #10709874)
Subject: RE: things were a little different this neck of the woods


Carbondale, KS

"Mike Tyson always said -- Everybody has a plan, Until they get punched in the face"

Always liked that one.

And agree.  

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99MAX
Posted 4/17/2024 14:48 (#10710257 - in reply to #10708878)
Subject: RE: Crazy Land Auction



Stearns County, Minnesota

Marking:

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Tank2516
Posted 4/17/2024 16:13 (#10710348 - in reply to #10709505)
Subject: RE: Crazy Land Auction


Well of coarse it is most likely cheaper than land what I was getting at is, if you have the money and want it, you are going to buy it no matter what you have to pay or if it is a good short term investment.
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PE.
Posted 4/17/2024 16:39 (#10710387 - in reply to #10709847)
Subject: RE: Crazy Land Auction


WC MN
Go back to gravy years of 19 teens, was a hundred years before tile installs exceeded that time frame. Also 1920's were start of tough years in farming by 1940 banks and insurance companies owned half the land in my home township. Anybody who has only farmed since modern Era of crop insurance (mid 90's) really can't comprehend what farming was like in previous years.
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redoak
Posted 4/17/2024 20:11 (#10710623 - in reply to #10709599)
Subject: RE: Crazy Land Auction


sw ontario
barren - 4/17/2024 05:20

A few thoughts on some of your comments/

Why didn't more people buy land during the cheap land buyers were trying to dump?  Lack of available credit, high interest rates on borrowed and CD money, but most of all, many were just scared to buy. 

Prices didn't return to those levels for 25 years.  It was my experience that is totally wrong.  Do you have specific examples of this in your area?  In my area I personally know of one farm that was purchased for $900 per acre in 1976, sold for $450 an acre in 1985.  Equivalent land in the area was bringing $1500K an acre in 1995. I also know of at least one example with better returns than this one.

9% CD'S were a better investment.  Short term but in a few years CD's went down while land prices went up.  In the example above $450 land going to $1500 i n 10 years along with profits from farming it are a much better return than leaving it in CD's for 10 years.

Regarding ROI being used as a major criteria for buying land.    Waiting for land to show a great ROI is an exercise in futility.  As ROI increases more potential buyers enter the market driving prices higher.  Some in the market for land then start revising their ROI requirements to compete with the guy who puts little emphasis on ROI.  ROI is never going to look that good in most cases. 

The above is my own personal experience along with an opinion or two thrown in.  It's worth what you paid for it.   



Agree with all your points. Us,Ron are like my Grandparents who farmed through the Depression, if u didn't experience it ,it can be hard to understand
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RCR
Posted 4/18/2024 00:18 (#10710901 - in reply to #10710348)
Subject: RE: Crazy Land Auction


SW Ohio
There are a few farms on that list for me. But I can't see leveraging Paid for ground to do it. More profit and farm less and pass on once in multiple generation chances is my position today.
If I had the cash, different story. But 100 acres is 1.5 million. I could retire on that.
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tmrand
Posted 4/18/2024 08:34 (#10711195 - in reply to #10710387)
Subject: RE: Crazy Land Auction



Southeast Colorado
But, since we are all actively farming in the era of crop insurance..............short of looking back to a historical period without it for amusement and appreciation of the farmers grit...........what do we gain when applying that time frame to today?
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tmrand
Posted 4/18/2024 08:43 (#10711206 - in reply to #10709902)
Subject: RE: Crazy Land Auction



Southeast Colorado
Let's hope that never comes into play. That will just be another hurdle for farmers..........with someone else taking another cookie off our plate.
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Iowa4thgen
Posted 4/18/2024 10:35 (#10711363 - in reply to #10709833)
Subject: RE: things were a little different this neck of the woods


Iowa
Around here the guys that survived the 80's are the only ones with the built up wealth to be buying the current prices...
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smallpup
Posted 4/20/2024 09:13 (#10713176 - in reply to #10708960)
Subject: RE: Crazy Land Auction


wc mn
except that there are making more land, more farmland, in Brazil. Gonna have made 250 million acres of it since the 70's here pretty quick...
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smallpup
Posted 4/20/2024 09:22 (#10713187 - in reply to #10709179)
Subject: RE: Crazy Land Auction


wc mn
yep, here land peaked in 81, never got back to that price until the fall of 2005. was it the ethanol boom that got us back there???
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Kooiker
Posted 4/20/2024 09:52 (#10713234 - in reply to #10711195)
Subject: RE: Crazy Land Auction



tmrand - 4/18/2024 08:34 But, since we are all actively farming in the era of crop insurance..............short of looking back to a historical period without it for amusement and appreciation of the farmers grit...........what do we gain when applying that time frame to today?



Crop insurance only protects revenue for 1 year, actually less than year.   

In a long term down grain market, crop insurance doesn't protect much.

We had crop insurance in its current form long before land prices really took off.   It took higher grain prices (ethanol boom) to really get the land prices jumping.

With or without crop ins, $4 corn and $10 beans won't support current land prices after the excess capital from the past couple years is dealt with.

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tmrand
Posted 4/20/2024 11:54 (#10713392 - in reply to #10713234)
Subject: RE: Crazy Land Auction



Southeast Colorado
But can you imagine throwing $1000/ac in land rent and inputs into an acre of corn and watch it get devastated with hail?

Having the back drop of at least getting a large portion of that back just changes the game quite a bit.

But I get your point too.
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Kooiker
Posted 4/20/2024 13:45 (#10713519 - in reply to #10713392)
Subject: RE: Crazy Land Auction



tmrand - 4/20/2024 11:54 But can you imagine throwing $1000/ac in land rent and inputs into an acre of corn and watch it get devastated with hail?




Yes, I can imagine that.     I have lost huge amounts of money to disease that has devastated groups of market hogs.   

Things have a way of evening out over time, you just can't be over leveraged to the point that you get taken out of the game before the tide goes back the other way.


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tmrand
Posted 4/20/2024 21:05 (#10714032 - in reply to #10713519)
Subject: RE: Crazy Land Auction



Southeast Colorado
I'm sure you can imagine that...........as can I for sure.

My only point..........was that without the insurance, land prices would be substantially cheaper. And guys wouldn't be looking to expand to ridiculous acreage numbers. If you lose $1,000 an acre...........just how many acres does one want?
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Kooiker
Posted 4/21/2024 00:00 (#10714211 - in reply to #10714032)
Subject: RE: Crazy Land Auction



tmrand - 4/20/2024 21:05 I'm sure you can imagine that...........as can I for sure. My only point..........was that without the insurance, land prices would be substantially cheaper. And guys wouldn't be looking to expand to ridiculous acreage numbers. If you lose $1,000 an acre...........just how many acres does one want?




Cheaper, yes.    Substantially cheaper, that I don't know about.    I suppose it depends on what one calls "substantial". 
 
Like I said before, it wasn't the current crop insurance program that lit the fuse on land prices.   It was a combination of the ethanol boom/higher grain prices, down trending interest rates and govt inflation.

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