ORIGINALLY WRITTEN BRADLEY GOERING
During the past year I have been attending various agricultural land auctions in the area to see how the market is holding up against the home market.
As stock market investments have headed downward, home and land purchases have been heading upward. That was true until several months ago when people in town began to lose their jobs.
Granted, part of the reason for the aggressive buying is due to lower interest rates. Because of the lower rates, they allow people to be reeled-in to purchasing real estate at a higher cost. There may be fewer bargains out there now due to this effect.
Historically, real estate has always been a safe investment for agricultural producers and investors. From 1907 to the early 1920s there was a run on agriculture land. The price people paid for land was on the rise. Then there was a steady decline until 1943.
When the 1970s hit, farmers saw a big run on land values through about 1981 to 1982. A 333 percent increase in land values struck the heartland. Once the period was over, record inflation and foreclosures on farms swept across the United States. These were tough times for agriculture producers.
To look at what we are going through today may make a person begin to think that history really does repeat itself. The difference now may be that farmers learned from the 1970s. Once interest rates begin rising again, we may see farm ground, residential homes and commercial real estate sell for less.
Working with farmers, I know their somewhat cautious optimism works in their favor. More know their cost of production; therefore, they know what they can afford to purchase when it comes to machinery, livestock and land.
We can’t predict the future. However, agriculture land will always have an investment value. As many have said before, “Land is one item that we aren’t manufacturing.”
Bradley Goering can be reached by e-mail at bgoering@thecsb.com and by telephone at 620-327-4941
