Bankruptcies of the 80s

[flea beetle]

Whenever we bought in the past it always seemed like too much money.
I always thought land was too expensive, still do, until you buy and have it paid for.
Did all the buying between 1986 and 2004. Pre run-up.
Sask land prices were lagging badly. Seems it was the best kept secret from Sask farmers.... until the rest of the world found out.

Would you buy the land beside you your neighbor is currently renting? Out bid them?
Remember we are STO's in the grand scheme of things.
Rent next to no land and own enough to be a modest sized farm.
We have capacity for more.

Seems prices here may have reached a level, that even farmers are paying but investors who are speculating are not interested. If high single or double digit increases in land values are what they're looking for..... that ship may have already sailed. All that's left is schtoopit farmers.

I currently rent the grain land off of the owner. He rents the hay and pasture to another guy.

To answer your question, if it is for sale and I know the renter had a chance to buy it, I assume he is passing on it. I don't go behind closed doors and try persuade owners to sell it out from under their current tenant though.

Rent is a different ball game. I believe that there is an unwritten rule that you don't stick your nose in someone elses rent. If I get approached by an owner to rent a piece, I talk to the guy that I know has been renting it to see what is up. If he says he is done with it, I then go talk to the owner. If he says he isn't done with it, I let renter and owner hash things out.

Have been in a situation where I told the renter that I was approached by the owner, and the renter had no clue that he didn't have the land for next year. I just don't want to be that guy in the community that everybody hates.

All bets are off if I hear that a guy has been snooping around anything I rent though.

[Oliver88]

Is that an FCC thing? Between family members only or a willing seller arm's length deals as well?

Purchase agreements etc must be needed. Contractual agreements tailor made?

FCC does offer this type of loan. It’s for any seller willing to take the payments over 5 annual increments, will save buyer significant $ on interest.

[blackpowder]

I'm sure its same everywhere.
You'll have 5 seconds to make up your mind.
Like a divorce, the longer the process takes the more it will cost. Transition sounds muddy and slower is my point.
People die, kids get involved, neighbors get pushy. Any or all three.
Be prepared to write the check that day. Far less risk.
Don't make taxes your first decision filter.

[blackpowder]

And because of inflation over time.
Every 30 yr old needs some debt.
There is no standing still.
Only moving ahead or falling behind.

[ajl]

Buying land today involves having faith that the government will not lose control of the market. All of the land price increases have been purely due to fakenomics. What happened in the 1980's was due to the realization that there would be hyper inflation if the central banks did not stop the money printing. They stopped printing and you know what happened next. Today of course is the same situation. They will not stop printing but will the market force them to do so? Market forces will push land down like the 80's because fundamentals are all bearish: increasing competition from the black sea and once the $usdx heads higher our customers like china and India can't borrow to eat anymore. We are currently seeing an inflationary blip due to covid printing in a deflationary macro environment. Anyways you will be buying the high and as governments around the world lose influence over their economies there is nowhere but down to go. Interest rates are heading higher as it will take even more printing to keep them down as debt demand goes hyperbolic. Will the US go to where the Fed buys all the debt? In canuskistan we are just about there already with the Bank of Canada being the only buyer of new debt. That said if the land next to me was for sale I would try hard to get it and would sell land further out to get it if possible. Offered for some land a few miles away recently that has been for sale for 2 years but am not prepared to go higher as it is marginal land. Some other land we offered for 3 years ago was sold internally to family this spring but the buyers want to flip that land again as well and this is in AB. Land prices are not as high as the local rumor mill has it either.

[Sheepwheat]

Land here went up some in the seventies. Then it crashed in the 80’s. And stayed crashed for 30 years. How old will you be in 30 years if it happens again?

I worry about today’s sustainability in ag. I don’t think it is sustainable. In several ways. If land hadn’t taken this run up, I can’t imagine the equipment and bins etc, that would not have been bought with high land values. When most farm growth is fuelled by land value increases alone, it is a bit worrying. My own banker told me this spring, it isn’t farm income buying the land, it is paid for land, wives jobs, grandpas kindness, dads co-signing, that is buying the land. It is most certainly not the kids buying it alone and on their own. His words, not mine.

Now, you have to make your own decision on buying neighboring land. Each farm has different financial issues. We don’t know yours. Flush farmers will always say buy buy buy. I am not flush so have a different view.

How flush are you? How many millions of debt are you cozy with? Do you have to buy it all? Do you have to buy it to remain feasible? Is it really needed, or is it that having someone else buy it will drive you crazy?

I bough a section of adjoining land before the run up. Thankful for it. Had I not gotten it, i would have not been close to feasible. So I felt I needed to buy it. If prices then, were as they are now, I’m thinking I would have had to be a farmer in the footnote of history, because I simply couldn’t afford land at these prices. And these prices are way lower than most areas are.

If land dropped in half, WHEN it drops in half, it wouldn’t affect me, because I didn’t base my future on high land values, nor did I borrow against land equity to buy anything.

Land could drop in half. Don’t kid yourself.

Make your own decision, not rely on a forum, with a bunch of wealthy farmers. Use your own reality. Not theirs.

[ajl]

We are in a situation where I am desperate for an opportunity to grow but there is nothing on the horizon. There was hope when interest rates were rising a year ago but now due to covid money printing it will not happen while I am young enough to do something with it. On the mediocre parcels there are no other buyers just the phenomenal greed of the sellers to compete with which has been rewarded by the aforementioned fakenomics.

[AlbertaFarmer5]

My thoughts on buying land, and the price cycles.

You have no control over when you were born.
You only live once.
You probably won't live long enough to experience 2 price cycles.
Will need to find a way to make it work at the prices available when you are young and ambitious enough to make it work, and the banks are willing to lend.

[STR1]

My thoughts on buying land, and the price cycles.

You have no control over when you were born.
You only live once.
You probably won't live long enough to experience 2 price cycles.
Will need to find a way to make it work at the prices available when you are young and ambitious enough to make it work, and the banks are willing to lend.

I agree on the price cycle and depending on when you were born.
I believe (in Sask anyways) there has been (at least) 4 events that have changed the price cycle.

1- Land in Sask was lagging a long way behind world trends and values.
2- The end of the CWB (good or bad please don’t turn this into a CWB thing) which allowed access to markets for people to sell product to service debt, in a timely manner.
3- Enter investors and Investment companies who are looking for a return on money and hopefully some capital appreciation. Right now they are on the sidelines but I think a 15-25% land price correction and they’ll be back big time.
4- Historically low interest rates


In my opinion these events have thrown the price cycle into turmoil, and I don’t know what the normal price cycle is any longer. I didn’t think the run up in prices could last this long or reach these levels.

[biglentil]

Tell me this if land prices go to infinity measured in dollars and so does a banana what is the value of your land?