|Land prices in the month of October were very stable. With a huge harvest in many areas, interest rates doubling in recent months on land financing, and deer hunting underway; there were two surprises that felt as if history was repeating itself this month.|
The first takeaway from this month’s sales data was that interest rates did not seem to effect high quality land prices prices at all. A and B quality ground sold at listing or live and online auction right in line with prices where we have seen them in the previous months. Land prices in C and D quality did see a decline of 10-20% due to the lack of buyers competing for the real estate or buyers focusing on quality ground with the cash or financing opportunities they do have available.
A and B quality tracts are trading in the 100-130/CPI point in MN and 175-300/CSR2 point in Iowa on tillable tracts, although on the lower quality farms we have definitely seen a pull back in the competition. In recreational land we have experienced the same result based on property having high quality timber, hunting neighborhoods, buildable sites for a home or cabin, and amities like cell reception or wifi capabilities benefiting the property.
The second takeaway was that the areas that did not have a strong crop this year due to drought, late planting, interest rates increasing substantially in a very short fashion, and major stock market decline did not cause land of all classes to be hit harder. The residential market as an example of comparison has nearly halted in many markets with many loan officers reporting a substantial reduction in loan applications as well as days on market and major reductions in residential pricing stacking up without buyers to support the correction. This history looks a lot like 2008-2010 where land was a stable investment that held its price during that time as well as stayed stable in the following years of 2015-2019 when commodity prices had dropped 50+ percent.
As we move through the 4th quarter busy season in the land real estate business, we have some very high quality tracts currently scheduled to be sold at auction. As well as new listings hitting the market daily or are currently going through marketing design. We are seeing land stay stable as it has for decades as well as continue to become more valuable with scarcity of availability acting as the foundation of it being a tangible hedge against inflation. If you or anyone you know is interested in taking advantage of the market as a buyer or a seller we would recommend reaching out to one of our licensed real estate agents. They are an excellent resource for conversations that have helped our clients make decisions worth hundreds of thousands or even millions of dollars in land real estate transactions.
We wish your a safe and bountiful harvest in the field and the tree stand!