Kramer Land Auction Yesterday

[farmaholic]

tstep. 20% would be a little steep in my opinion. I'm not saying it won't go that far, just saying that would be a pretty good hit.

[Klause]

That would mean in this area from 275,000 to 220,000. Not a real big drop. ..

[ajl]

The 16% drop in the $CDn since last summer is masking the declines in Canada. That is why everything seems flat with last year.

[freewheat]

Not to be too pessimistic here. But long term, I still see land CRASHING.

Long term profitability and productivity HAS to count towards the value, I don't care who you are. Unless, we suddenly have a string of great prices again.

Costs are simply not going down. and as long as we insist on millions of dollars of highly depreciable machinery to go along with today's farming "needs", we are going to need more than 6 dollar wheat to sustain land values.

It has crashed before. I think a 20% drop is a joke, actually.

[sk_wheatking]

Guy's if you think credit is tight right now what do you think it would be like if land prices "crashed"? I don't think that 65,000 dollar quarters of land are going to benefit anyone. I think that there are still guy's out there that have the ridiculous notion that land is overpriced which it isn't. Land is the only thing that farmers have that is really worth anything in the long term. I for one am more than happy to see the big run up in land prices. It makes what I have worth a good dollar and if I don't buy anymore I am happy with what I have. Like I said,if land goes down your credit goes with it. One other thing that drives me nuts is the guys who complain,yeah but what about so and so,he wants to buy a quarter of land and start farming but how can he do it when prices are so high!!??? Well if your hinging your farming career on 1 quarter of land I think that you need to figure out another line of work.

[sumdumguy]

Land in our area sold for over a $1000 in 1979. Even $1500 was mouthed. By 1991, we bought that same land for $375 an acre.

[sk_wheatking]

a package of cigarettes is around 20 dollars,if land was selling for 375 an acre would that seem right to you? I get your point but in reality what do you think that land should be worth then? All that I am saying is that cheap land is like 2 dollar wheat or 4.90 canola it will take you down because land is a farmers only hard asset. Farmers should welcome the higher prices,fluctuations will come and go but hopefully land stays up where what you own is worth something because in the end why should you work a lifetime and then at the end sell your land for some bargain basement price, you worked it,bought it so you deserve to make something on it when you want to sell or rent for that matter. Like I said before guys will buy diesel 4wds or tractors combines whatever for huge money and they are worth nothing in a couple of years.

[tweety]

compared to other parts of the world, its a bargain.

[freewheat]

Depends where you are I guess. Land also has to make economic sense. How much of cigarettes is tax? And what does the price of cigarettes have to do with land values?

The net return per acre is what this is about. Western Canada is not Iowa, and long term net returns per acre are pretty pathetic, unless you were lucky to grow crops the last half dozen years.

There are many reasons land here has been cheap relatively. If you don't know that, you are younger than me, and I am 38.

And no, I do not want or desire land to crash. I just think it may well do just that.

The value of my land is not what keeps me going and keeps my credit strong. Repayment ability, and net return per acre, is what keeps my credit alive. Land value is great when selling or rent time comes.

What good is another 300 000 dollar quarter, if it is dry and canola yields 23 and is worth 7, with costs of 300 plus dollars? Worse still, it yields 40 and is worth 10, but is not possible to move, because of the gong show going on right now?

Remember, not all of us have had the big run up in values, or are in those areas which have gone insane, thankfuly.

Land: They don't make it any more, make sure you get a bunch of it that has a net return of 40 bucks an acre before payments of 120. Makes sense...

[Lex]

Land values and net return from farming do not necessarily correlate. Land is a long term investment. And it NEVER cash flows in the short term.

If you could pencil in a profit from a land purchase then so would everyone else and they would all bid up the price.

Land/real estate prices may decline in the short term. Collapse? I doubt it. And sooner or later they will be on they rise again. Especially in Saskatchewan. Land in Saskatchewan is cheap relative to the rest of Canada and the US.

One of the underlying fundamentals is world population. We add 75 million mouths to feed on the planet EVERY YEAR! Another factor is inflation. The worlds banking system based as it is on fiat currency is stealing a few percentage points of YOUR WEALTH EVERY YEAR! So measured in fiat dollars land goes up as a near perfect hedge against inflation based on that factor alone.