Kramer Land Auction Yesterday

[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.

[ado089]

The land at Cando sold for 2.3x and the stuff at maymont sold for just over 2.5x. Not the best land in sask but it was all assessed between 85-110k. This was a pretty soft sale. No investors or hutterites.

[TOM4CWB]

ado,

The QE money must go somewhere. Simple. Which is the whole purpose for money at 0 percent interest.

How many global nations can afford to raise interest rates and still remain solvent?

China has manufactured a niche... and is a hybrid economy... who makes up the ground rules as they go... with a massive population to be exploited by its gov. No surprise it is doing OK considering where it has come from... and those folks are smart plus tend to work productively coming from roots of poverty and being starved!

[blackpowder]

Freewheat isnt wrong but.... In 81 we had $1000. 91 $500.
Everything else will be awful for it to fall in half again. But of course anything is possible especially with time.
Looking at the differences.
1. Buying power or size of purchasing entity related to the purchased piece. This will always drive $/ ac. Unless communism rules. Or every buyer follows the same playbook.
2. So far we have an ever increasing fluidity in the world of capital, ideas, and people. Technology steadily gets cheaper. As long as the rest of the world needs food and has money or guns you will not be an island.
I wont make predictions. But for values to fall in half in our lifetimes a mountain of equity/cash has to vanish. For most of the world.

[ajl]

The notion that interest rates can't go up because there in too much debt is laughable. They should go up because of too much debt. In 1980 the economy was weak as well and interest rates went up anyways to head off hyper inflation. Actually the main difference between today and 1980 is an aging population that is naturally deflationary. Demand is weak and getting weaker. That is what will drive real estate values lower over the next 30 yrs.

[farmaholic]

Klause, I'll take that $55k savings from $275K down to $220K when I buy 4 quarters and buy another for $220K. Not substantial???