That's ****ing crazy. This land market is gonna crash and crash HARD soon.
Depending on who bought it, the land will be used for crops or for a Wind turbine farm. NW Iowa and Iowa in general is one of the best places in the world for wind power production. It was also an auction, so naturally the price will most likely be higher than fair market value.
I haven't looked into this too closely, but I keep hearing that non-farmer investors are increasing looking for tangible assets like farm land. It makes you question the real value of the dollar. Non-farm investors are buying up farmland - Lincoln, IL - Lincoln Courier
About this much:Quote:
It makes you question the real value of the dollar.
The only explanation someone would by land for that price is if they plan on building some kind of major business there. Another poster thought they could build a win turbine farm which would easily explain buying land for that price. If they plan on raising crop there, they are going to go broke fast.
For those of you not familiar with how things like this work, what most likely happened is this 80 which is a small piece, was around someones home farm. He was gonna buy it no matter what and everyone knew it. So someone who didnt like him or wanted it equally as bad ran him up. This in no way gives an accurate picture of what farmland values are nor does it indicate a trend in farm values
If you averaged it out over 30 years. It comes out to about $730 per acre on just land cost alone. Inputs are probably going to cost around $500 per acre right now (I took that from Steve Johnson, ISU Extension), so thats $1230 per acre every year. If you got 200 bu of corn off it every year for the next 30 years, you'd have to get at least $6.15 per bushel every year to cash flow it (if inputs stayed the same).
Now the other half of this is this just raises the average land value of all his other land. If he's got 500 acres paid off already, paying 730 a year on land for 80 acres means his land cost is only about $135 on all 580 acres and he only needs to average 3.18 over 30 years to make it pay. It all depends on what your Asset to Liability ratio is.
Yeah, this is a major jump from land prices in the 70's and 80's. It either says that people are desperate for tangible assets or they don't want the dollar or other alternatives. If it's a farmer, that's too much to pay for land. If it's an investor, that's a lot of years of cash rent to collect.
Brother is a commodities broker in Sioux Center. He thinks it may be the best land in the state. But even so, that seems like far too much..
Above the average for 98 counties so it's pretty good.Quote:
The land carried a Corn Suitability Rating (CSR) of 84.1.
As someone who spends most of his days working with the individuals purchasing land at these prices, I can't say I am surprised. Many of these growers are once again seeing near record yields with record price levels, and they have a lot of cash on hand.
They know it seems ridiculous, but can't seem to find a better place to invest their money. Stocks don't look good to them, and if you buy land at least at the end of the day you are investing back in your business. Price 26 has it right on.
Someday this bubble will pop, but all signs point to it not happening in the near future. Worldwide demand is continually increasing and ending stocks are decreasing....