New record set for land prices in Iowa

[MLamirandeRM]

74 acres of farmland in Iowa reportedly sold for a record $20,000/ac!! Seems a little steep to me!

Michelle - Farms.com RM

[ALLFARMER]

Location location location ? 1.5 million is pocket
change to many large farmers. Bio fuel cash,
How many farmers in Iowa could put their crop in
for 1.5?, likely less than 35%. Go buy 1 new
John Deere combine with a pick-up and straight
cut header, $560,000.00 To a farmer in today's
day and age 1.5 is just not a lot of money.

[Hopperbin]

1.48 million for 74 acres, havn't heard of the price of prime undeveloped acreage property outside Saskatoon lately but last I heard some land was selling for 10 thousand an acre but the seller had to hold off to get that, the guy had one quarter surrounded by acreages and was refusing to sell. I must state clearer the guy was offered 1.5 million for his quarter, did not sell it at the time I talked to him.

[Hopperbin]

Allfarmer with the USA gov't starting to think that they need to stop subsidizing their millionare farmers with million dollar payments. Isn't paying huge record dollars for farm land not a good investment even though land was a good investment in the past? There must be an alternate use for this land.

[cottonpicken]

3 chicken eggs in zimbabwe sold for 100 billion.

[MLamirandeRM]

The question to is whether or not a significant bubble is forming in terms of farmland prices. In addition, what happens when interest rates start to rise again and the payments on those $20,000/ac rise.

[cottonpicken]

The answer is no.

Why?

If interest rates rise:

-federal government bankrupt
-state governments bankrupt
-city and municipal governments bankrupt
-most homes bankrupt
-stock market collapse
-all pension funds gone
-tax base destroyed
-all medical and social security benefits gone
-all government employees laid off
-all military employees laid off
-all government revenues goto interest payments
on existing debt



This is why qe is here and here for good.

[Hopperbin]

The interest on 20,000 per acre is already 800 dollars per acre at a rate of 4 percent.

[Hopperbin]

I thought you were hollering bullshit until I read the article.

http://muamalahcouncil.com/news/34-general-articles/95-blueprint-for-disaster-new.html

3 eggs did sell for 100 billion Zimbabwe dollars.

[freewheat]

Saw this too. Was bought by a farmer, a
dairy farmer with 240 acres, not a bto.

So why not look at the equivalent here?

Corn at 200 bushels at 6 bucks = 1200 an
acre gross, less inputs, payments etc..

20 000 / 1200 = 16.6 times the gross
revenue to arrive at the purchase price.

Where I am at, is a traditionally high
yielding area, which has had a crappy
run of it weather wise. However, here
are the numbers for me.

Canola gross: 40 at 11 = 440 gross

Land value is about 5-7 hundred an acre
MAX.

Now, when I take the 16.6 factor, and
multiply it by 440, I come up with 7300
bucks. My land should be worth 7300
bucks I guess.

Granted, they would have a larger margin
or net, BUT something is nutso here.
Using Gross numbers and no interest it
would take nearly 20 years to recoup 20
000. Just in gross!

My factor is 700 at the maximum/440 =
1.6.

And again, I don't just grow canola, but
to have that factor of 16.6, I would
need to grow some pretty tiny oat,
canary, feed wheat, flax, pea crops.

It is dangerous to me, but many
agtalkers state they ain't making land
anymore. Sure but look at this in terms
of repayment. Nutso. And then you have
to HOPE that it actually appreciates.
Everyone says the 80's can not happen
again, but I have a sneaking suspicion,
many guys are going to be losing their
shirts, along with their gotch in the
relatively near future.

[cottonpicken]

Lol,i like saying crazy stuff but not about this kind
of stuff.

One of the best measuring sticks to use is gold.

Without using precise numbers 20 grand is about
10 oz per acre.

10 years ago gold at 300 would translate into 3000
dollars an acre,i don't know iawos land price back
then but the point is obvious.

A lot of people out there have a lot of money and
they are slowly waking unto the fact that purchasing
power is being destroyed,by socialist's and
conservatives,because they are just so damn
clueless about money and where it comes from.

So when gold hits 4500,whats land worth?

[newguy]

Bought my first land 35 years ago for 45 thousand.Seller bought a house with money. Same house worth over 300 and land worth 175. Both still used for the exact same thing as back then. Sask land has still a bit to catch up on other real estate values in province let along rest of country or world.

[LWeber]

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[mbratrud]

Western Candians are used to paying for land in a Generation or less, when in many other Parts of the World including Eastern Canada that just doesn't happen. I beleive land is just going to become more expensive, not saying it won't have dips but over the next generation, certainly wouldn't ne surprised of todays values look like bargains. Speaking specific to western Canada. Also Cotton I agree 100% with your thoughts on interest, as long as it is within Government control. Just make sure you are dealing with a credible banks and NOT JUST ONE. Have a credit rating and relationship established with more than one bank.