Value of farm land

[Klause]

Cure for high prices is high prices, eventually.


I'm out of the land market unless we get a good deal....

I can see things dropping around here back to that 1,000-1100 / acre mark.

[BreadWinner]

Land is being bought up by investors to be a safe haven for their money not to make huge profits. Land won't go down in price, it's called inflation and we better get used to it. Buy land if it works but the days of being able to pay it off in a lifetime are coming to an end. Every piece of land that I've bought has turned out to be a good decision even though at the time you really wondered.

[foragefarmer]

Braveheart

$3000.00 an acre that's is insanely high. I thought you were aggressively buying land off the neighbors based on previous threads? How do you and your son make the numbers work at those prices?

[farmaholic]

And that's the difference.....

Well heeled Hutterite Colonies or private farms who can subsidize it with paid for holdings. Investors who are looking for somewhere to store some cash. But if I was to buy it, it would have to show some hope of paying for its self even though we have 16 paid for to help. Otherwise how good of an investment is it? There was an adjustment in the mid eighties, it can happen again, then how long can it be before you get your initial investment back?

If you're going to finance $3000/acre dirt, how much will the bank lend you per acre? They could care less if you want to pay 5k, they still may only lend you $1500-$2000/ acre. Then there's the amortization period, depending on the length of the term, be prepared to pay nearly double what you borrowed.

It hasn't reached that level of insanity here yet. The dirt may not be worth those values to start with.

[Braveheart]

I never said I was aggressively buying. I a said something to the effect that if some neighbours kept tilling we'd soon own their farms.

That was a snarky way of saying tillage is unsustainable around here. (God, I'm sick of that word, sustainable).

We find that number too much risk right now. I know, "you want the biscuit, you gotta risk it". We just need to be strategic. It's war after all.

There are crazy things being done in this area in capital outlays for machinery, land purchase and even rent. Farm Debt Mediation will be welcoming some new entrants soon.

[freewheat]

Latest sale around here was well under 1000 bucks, and I thought that was stupidly high.

Shows how hard relatively that our area has been hit with weather issues, as well as there is no pressure from investors around here thankfully.

It may also show however, that the guys around here show restraint, and are only willing to pay an amount if it makes sense, and pays its own way.

And this is in an area where there are 10 young, under 40 farmers within an 8 mile radius. Rent is 30 to 40 bucks, no one will be the guy who gets blamed for stupidity I guess.

We farmers around here, seem to have collectively refrained from being silly, which I think some of the numbers you guys are putting forth are...

Silly for three reasons:

That some think land will always go up in value, given the history of Saskatchewan productivity issues, and climate, relative to the rest of the world.

That some seem to have forgotten what happened last time there was a rise in land values. It took over 30 years to actually get back to late 1970's levels, the interim in which during land prices, they CRASHED.

And the third reason it is silly, is if one could get 300 grand to a half million a quarter, why would one farm? I mean really? I would be gone in a heartbeat, and I don't even own much land compared to most guys on here.

No wonder back when we were comparing costs and some thought mine were too low, some got persnickety about it.

I dunno, to me land is worth what it can produce, not in a string of 3 or 4 good years some seem to have had, but over the course of 20 or so years.

Anyone have a repayment pencil to show with proper crop rotation, how 2 and 3 thousand dollar land pays its way. And no, I am not talking about subsidizing with other land. I am saying you go and normally buy a quarter of land for 300 g's, and borrow 75% of the funds. No old money, no daddy cosigning. Just a guy going to the bank for more than 200 g's, after some-the-heck-how coming up with 80 g's after tax to put down.

I mean, you are looking at around 100 bucks an acre in payments each year for 20 years.

Pencil it for me?

Am I so far gone here?

[Braveheart]

Freewheat, you are on the money, not out of your mind. It doesn't pencil out. Real sharp figuring might make 2000 /acre pencil here but that's tight given weather (SK3 shitstorm weather).

But pencils don't matter. All things trade for what people are willing to pay for them. Right or wrong that's what makes a market.

FCC is right there willing to help with their interest only loans.

[farmaholic]

Tom. Determining the value of grain is determined by supply and demand, competition or lack of for the supplies and yes even substitution if prices get too high. But where I think you're wrong is COP, I really doubt it matters to the buyers what it cost me to produce my crop, they only want to pay as little as possible...

[blackpowder]

I'm sorry Freewheat, but you're full of shit.
I think your only summation that makes sense is that your area has been very hard hit in successive years. And in the valuation angle there might be the opportunity?

[farmaholic]

Wrong thread...sorry.

[blackpowder]

Freewheat, you're full of shit. The only summation that makes sense is that your area has been hard hit for successive years. And for that regard your land is worth what it sells for.
Productive value? Nice dream. I sounded like that 20years ago. 10young guys in 8 miles? Your microcosm is either in a time warp or on the edge of the boreal forest.

[freewheat]

No, I just am in an area where these mostly German farmers were smart over the years, and very few went broke and so therefore there are many young guys around to farm. Their parents have done well, and so farms are relatively smaller and tighter spaced than in many areas.

In 1979, land was worth 100 g a quarter. then it nose dived. The next time it was worth 100 g a quarter, was in 2013.

I do not get why you are so angry at me, blackpowder????

I dunno, I bought land in 2009 for around 600 an acre, and it is paying its way nicely, just how I like it to. If it doesn't, why would I buy it?

I fail to understand your comment, I guess.

We are in what once was one of the top ten highest yielding rms in the province. Lately, not so much.

[freewheat]

The number of farmers here also shows that historically, this has been a very productive area.

[freewheat]

Upon further reflection, I recognized I missed some guys. I need to revise my young guys within 8 miles to 13 under forty years, after looking more closely at the map.

[Partners]

OK lesm..

You heard the values, are you going to buy alot of dirt or what?

For us who are older, plan to retire in 10 yrs or less depending on health..Hope land prices stay high or even go higher..