Brian from Ohio asks,
Hi Bill, What are your thoughts on buying farm/rec land under the current economic conditions? Has demand in your area continued to stay the same or has it started to cool off some? Reading your blog about how you built your farm is very inspiring. Hope you and your family are doing well.
Bill responds,
Topic: Is Now a Good Time to Buy Land?
Unless you are buying your dream farm, that you plan to own for a long time, I think you need to be really careful in this market. The rates of appreciation we have seen in recreational land are not sustainable and eventually (maybe pretty soon) something will have to give. As a short to mid-term investment, it feels kind of dicey right now.
Kirk,
I appreciate the comment and support. I think you only buy now if your dream piece comes on the market. Otherwise, I personally think you are better off waiting to see what happens within the greater economy. The kind of gains we have seen in recreational land are not sustainable – at least not for any amount of time.
I guess it is possible for recreational land to go up still, but there is an equal chance it will flatten and possibly even trend down for a while. Again, the rapid gains we saw can’t keep going. For the prices to eventually converge back on the long-term 6 to 8% appreciation line (assuming that still matters) they will either need to come down or flatten for a few years.
We saw this in 2008-2018 (roughly). There was not much appreciation in recreational land during that decade. Maybe demand is higher now with more people able to work remotely and more interest in rural areas, and that will cause this run to last longer, but I still think some kind of pause/correction will come soon that resembles what happened in 2008.
Plus, the economy at large is still a question. When there is this much uncertainty, it is better to have some cash than to be strung out on debt.
Demand still seems strong in the areas where I have been looking, but it is hard to say that for sure because supply is so low that just a lack of properties on the market might be forcing people to compete harder for them. If the supply increases, I expect that will start flattening or even lowering prices. Not sure what will cause that increase in supply, a recession? Time? Not sure. It is a strange time, for sure.
Good luck. Happy 4th of July. (7/4/22)
