Thoughts on Land Price Direction

[shtferbrains]

Wasn't so much the high land price alone but high interest on top.
Also CWB didn't cash flow worth a darn.
Operating loans were hard to negotiate if land price/equity was eroding.

Smothered a lot of enthusiasm for borrowing.

[GALAXIE500]

In my area , land prices will depend on how greedy one buyer is compared to someone else. It's been this way for years.

[Old Cowzilla]

Just for the record it wasn't just high int. rates that kicked everybody in the 80's. Canola dropped 30% from its highs and the wheat drop so much that there was no final payment on no. 1 the one year. ( 86 I believe ). Oh and some drought years thrown in for some more good luck. We all know from business that when things go wrong it's a few things at the same time. Dam it's -1 this morn not bad for January !

[jazz]

Rates cannot go back to 19% like the 1980s. The entire financial system including govt sovereign debt would default at 6%.

US is already spending more than its military budget servicing the debt.

Canada is spending $40B a year on interest pmts. Who knows where Japan, China and the EU are.

[goalieguy847]

Its truly a precarious time...

Im of the belief that commodity prices wont come down more than 10-20% over the long term with canola most likely settling into that 16$ range...
Currently the only thing holding the cap on land values from exploding is the interest rate..and if that starts to come down in 2-3 yrs then land values should keep going up.
If we in western canada can start consistently gross revenue-ing 800$/ ac vs the 500 we have been used to ..then itll get interesting.
I believe land trades around 8 yrs of gross revenue value ..maybe 7. But somewhere in there.
1000$/ ac gross should bring in 7 k/ ac.
5000 was roughly 3500/ ac and i would buy every acre i could at that ( if it was good land...)

[Sheepwheat]

Last time I checked, gross doesn’t pay for land nor pay a living. Net is where it’s at.

A guy can gross 800 bucks and net peanuts.

[jazz]

If we in western canada can start consistently gross revenue-ing 800$/ ac vs the 500 we have been used to ..then itll get interesting.

You forgot to count the double cropping we will be doing when climate change finally arrives.

[makar]

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

My own 1979, sitting on a tractor 1969. I have lived for better or worse to survive not get rich, still surviving. !981 broke half the people made the other rich on interest.

[makar]

Rates cannot go back to 19% like the 1980s. The entire financial system including govt sovereign debt would default at 6%.

US is already spending more than its military budget servicing the debt.

Canada is spending $40B a year on interest pmts. Who knows where Japan, China and the EU are.

Rates werent 19, they were 24 to us.

[Rinker]

Last time I checked, gross doesn’t pay for land nor pay a living. Net is where it’s at.

A guy can gross 800 bucks and net peanuts.

I agree with you on this. However your gross is 0 with land that you don't farm. If you have the opportunity to purchase land, especially a stones throw from home you should very seriously consider it. And if you can pencil it in then jump. Some pencils are sharper than others, Others are on their last stroke. Make a calculated decision.

[Sheepwheat]

I agree with you on this. However your gross is 0 with land that you don't farm. If you have the opportunity to purchase land, especially a stones throw from home you should very seriously consider it. And if you can pencil it in then jump. Some pencils are sharper than others, Others are on their last stroke. Make a calculated decision.

Exactly. But just once I wish someone would share on here the secret, very special pencil, using specific numbers that show farming can buy land at these values. But no one actually can.

[blackpowder]

Exactly. But just once I wish someone would share on here the secret, very special pencil, using specific numbers that show farming can buy land at these values. But no one actually can.

Doesn't matter. They are. You will grow old looking for that pencil and not have the answer. And at the end, they will still be doing it. Just ask me.