This Current Recreational Land Boom

Scott from Pa asks,



Bill, your land blog series is an incredible story and i am so glad you shared it. In part 2 of your land blog series you wrote this. “I remember a kind fever that existed. People were buying big farms sight unseen off aerial photos rather than risk having someone else jump in and grab the property. This swell in demand was just ramping up and I could feel it very tangibly through the number of people who called me and asked me if I knew of any farms for sale.” My question is how does the land fever of 2006-07 compare to the bit of land craze that is going on currently? Obviously no one knows what the future future holds but do you have any predictions for the real estate market? Thanks, take care!




Bill responds,


Topic: This Current Recreational Land Boom:

Scott,

Recreational Land Boom

Hunting land is not cheap right now in the same way that it was cheap in the mid-2000s. As a result, this land boom is different. I think it will be short lived and the prices will stabilize before going up slowly again.

Thanks for the support. I am not very good at predicting the future, but the craze in the mid-2000s was different from now in one very important way; the land then was undervalued dramatically. We were coming off a time when people didn’t see land as a good investment and no one was really pursuing it heavily.  Even farmland was not highly valued then. 

People were buying it up fast because it was cheap.  Now, it is not cheap.  Land is pushing the upper limit of value, as far as I can see. I think it will always be a good investment, but to double from $1,000 per acre to $2,000 per acre as it did in the mid-2000s is way easier than to double from $5,000 per acre to $10,000 per acre.  As a result, I don’t see the prices going higher fast. I think they will stabilize for a while – just my guess.

As a result, I don’t see quite the rush of investors in the land market right now. It feels more like end users are the main buyers – people who want the land in order to keep it.  I think the market will keep going up but without the investors playing a big role there is less turnover so land will come up for sale less often.  Again, I think land is always a good investment, but not always a great one.  It was a great one back in the 2000s.  

I think the risk to the land and even the housing market is inflation.  Inflation will force the Fed to raise interest rates to cool down price increases and that will shut down a lot of buying interest in real estate.  I think it is bound to happen. Prices keep going up and that is the very definition of inflation.  I think you will start to see interest rate hikes soon. Just my guess. I would still buy, I just don’t know that you need to be a panic buyer.  Look for value. Good luck.  (8/31/21)

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Comments (2)

  1. Tdog

    Hi Bill, I’ve always loved not only your wisdom and content but also your values and what you stand for. Feel so grateful to have found your site and what you are doing again. Glad you are taking it at your own pace, so that you can still enjoy what you do. I recently added a comment on your last Land Blog pt 7 post but should probably have just read your comment here first for your opinion. i have accepted an offer on my 80 acre farm because I felt it was too good to not accept. Now, my struggle will be what to do from here. I think i can now buy from family but the prices to be so high currently and i fear end would be an “end user” purchase as it would be family land plus such high current prices. I can search and search for a next property but not sure if A: can I find someone willing to sell. B: can i find a value in this current environment.
    I guess it would be better to hang on to the money, even if I pay the 15% LTCGtax i’m looking at rather than over pay on a next property. better to sit and wait it out and be ready than to rush in.

    1. Bill Winke

      Tdog, My guess is that prices will go up a bit more because of all the cash in the economy right now and then as inflation sets in the interests rate will rise and we will see at best a flat price and possibly a decline. I don’t know how to predict this, but inflation has to result and when it does, the number one way the government battles it is to raise interest rates to slow the supply of cash in the economy. Again, though I believe it will happen, I don’t know when. Cashing out is not the worst thing you can do, but when you are in an inflationary time, having cash in the bank is a bad thing as all assets are going up but your cash is worth less and less each year. Best to find some kind of asset to invest in that will rise with inflation. Good luck.

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