Thoughts on Land Price Direction

[TASFarms]

So what is everyone’s opinion on where we are at based on the 1980’s? Are we even anywhere near having a similar type of event? Are we in a situation that will play out worse than that timeframe? Are we in the 70’s still, and have a few years before we have to start worrying?

Personally I feel we are on the crest, and headed over the downslope. Just not sure if it is a small gully, or a cliff.🤣 Not going to sit still in fear and do nothing, but want to look over my shoulder cautiously as well.

You will have a better idea when 1 bank crashes.

[cropgrower]

well i seen back in 08 land droped 50% overnight in ireland , now its up to around of 75% of where it was before 08 crash , we moved here in 2006 and the increase in land value here from then to now has been huge and has turned out to be a great investment ,however after seeing what happened in ireland i never buy the opinion that land stays going up , would not take much to pop the bubble here now i think

[Rinker]

well i seen back in 08 land droped 50% overnight in ireland , now its up to around of 75% of where it was before 08 crash , we moved here in 2006 and the increase in land value here from then to now has been huge and has turned out to be a great investment ,however after seeing what happened in ireland i never buy the opinion that land stays going up , would not take much to pop the bubble here now i think

Did the cash rent drop 50% as well?

[cropgrower]

i would not think their was a huge change in rent as far as i remember , banks pretty much stopped giving loans , but their was almost no land on market (who wants to sell for half ?) except what had been repossed by banks , some farmers bought back their farms for less than half too! their was huge winners and losers when the smoke cleared

[Sheepwheat]

In the 80’s it was interest rates, and interest rates alone that caused mayhem.

Now? There are many things that imho will cause mayhem.

Iron and the wants or needs to have the latest and greatest. In the 80’s, guys made do. Now?

Extreme expenses. My dads 80’s income tax says it cost him maybe forty bucks to grow a crop, all in.

Extreme land values. Values that are inflated far above farming actually paying for it in most cases, unless one is exceptionally fortunate.

Extreme rent rates.

Summerfallow. Like it or not, it DOES store moisture and releases nutrients. Everyone summerfallowed some in the 80’s. It got guys through with zero inputs in a pinch.

Diversity of farms. In the 80’s, hardly anyone had straight grain. The diversity helped many through those dark years. This includes cows, pork, and a lot of farms still grew a lot of their own food.

In the 80’s, there were western grain stabilization payments and ad hoc payments guys who didn’t need it still received.

In the 80’s, many, many farmers were making more in interest than they were farming. The careful and dare I say the wise, made out like bandits. A far too often overlooked fact in an era when 20 000 was a pretty fair net income.

That’s just a very few differences from now and then.

[fcr]

In the eighties BTO,s who outbid for land then could not make payments cried to the gov,t about banks repo their land, so the farm debt review board was set up.Lenders were forced to negotiate, mostly for half of origanal loan.Pure crap.

[Guest]

In the 80’s a man could make enough in the winter to pay inputs and rent on .6 or 8 quarters
Now can’t even pay the fert bill alone
Off farm Work is hopeless now

[GDR]

So what is everyone’s opinion on where we are at based on the 1980’s? Are we even anywhere near having a similar type of event? Are we in a situation that will play out worse than that timeframe? Are we in the 70’s still, and have a few years before we have to start worrying?

Personally I feel we are on the crest, and headed over the downslope. Just not sure if it is a small gully, or a cliff.🤣 Not going to sit still in fear and do nothing, but want to look over my shoulder cautiously as well.

Timely thread for me also, thank you for that. No shortage of optimism in this neighborhood. I turned down a bordering quarter last spring at 1.1mill because i thought the price was too high when I could have gotten 4% interest rate and have kicked myself all year since. Now I've had 3 more quarters that i currently rent offered to me for similar money 10 miles away and poorer land but now I'm looking at 6/7% money or loose them as rental as a line up of guys are after them to buy. Land being sold everywhere here, guys very aggressive, nothing under 1 mill. Nothing makes it to the realtors, all private deals and gone, no chance to think about it as there are 5 other guys with cash.

One young middle aged guy, only owned a half section before last year and rented the rest has bought 7 quarters.... how does that work??

Everyone keeps telling me land wont go down. I'm not so sure, back to $11 canola, $4 barley and $6 wheat will curb enthusiasm pretty fast, and its not a matter of if that happens but just a matter of timing.

Interest rates don't need to go much higher to have a huge impact, it just takes time to work its way through the system.

UFA tells me all kinds of guys have balances owing on their accounts at 19.5%. How long can that last? Is conventional operating money getting tight?

So who knows what the right answer is? Worst part is life is too short to wait these things out. I am trying to remind myself daily, if you are making a decent go of it as it is, why do you need more? And if you need more, just make sure it doesn't risk what you already got.

[Guest]

Well all you need to ask yourself is ;
Has land ever dropped before ?
If you can’t answer that , just ask anyone who was farmin about 82

[blackpowder]

Yup. 22 years to get back to 1981 price. It actually shaped my mindset for most of my career. And led to many missed opportunities. But I'm still here.

[Taiga]

Lost out on bordering land once (I tried), guy who bought it went bankrupt three years later. Lost out a second time (I tried again), new guy is on the same path, looks like same timeframe. Third time is coming, might get it right this time. Don’t need, it’s just hard to miss out on bordering land.
There is a lot of debt out there and expenses are extreme.

[blackpowder]

Maybe the question is; is there a paradigm shift coming? Or a big bump that recognizes actual economics?
I often think in those terms when I recall the people who quit in the 80s.
Or the cattle farms before BSE.
In sudden fashion, actual economics that had been evident, slapped some real hard. Triggered by an unforseen event.
So what writing is on the wall today?
Interest costs are double. Cost of living took a big jump. Sure, but what big harbinger do we see? That's what I'm not sure of.
For me and I assume others, economy of scale is getting increasingly difficult.
The smaller to medium sized operations will disappear quickly as many will age out.
All the buyers here are multi gen, multi family, larger operations.
As always, trade issues are the risk.
What is certainly different now is the velocity of change. Speed of money is unimaginable compared to then.