Tuesday, August 31, 2021

Farmland: Prime Iowa Land Sales Setting Record After Record

Can farmers make money off of land at these prices? I do not know.

If they can't, we may be in the "Greater Fool" phase of farmland prices ("I may be a fool to pay this much but there will be a greater fool to pay even more")

The third reason for bidding up farmland is the material-non-public information/zoning-change play but looking at this piece of land it does not appear to be on the edge of a major metropolitan area, where that kind of skullduggery is usually found.

From AgWeb:

Once, Twice, Sold! 80 Acres in Iowa Sold for $22,600 Per Acre, Sets New State Record

The bull-run on Iowa farmland sales continues to play out in August. Less than two weeks after a piece of farm ground in Iowa sold for $19,000 per acre, a new record sale was posted in Iowa Friday, cashing in at $22,600 per acre. That tops the previous record by $300 per acre.

The sale was on 80 acres of ground in Grundy County, Iowa, which is located west of Waterloo. 

“The farm did have a wind turbine on it,” says Jim Rothermich, of Iowa Appraisal and Research. “The buyer was an investor-buyer, and the runner-up was also an investor. So, the wind turbine income stream did help the purchase price reach that high, but most of that 80 acres, or the lion’s share, was all farmland.”

Eye-Popping Sales Continue 

Rothermich tracks farmland sales and values in Iowa. He says while the new state-wide record sale was eye-popping, it was only one of the county-wide record sales he has tracked across Iowa....

....MUCH MORE

Recently (this growing season):
June 11
[outro] One thing to look at is eliminating the step-up in basis for appreciated assets upon the death of the taxpayer. There are billions and billions of dollars worth of capital gains that go totally untaxed as title to the assets moves to the heirs. This is one of the most inequitable features of the tax code, entrenching a financial aristocracy, and we are not just talking farms. You don't think the Walton clan became the richest family on the planet simply through lucky genes do you?  
June 10 
 May 25 

May 21
Creighton University's "Rural Mainstreet Index Soars to Record High: 90% of Bankers Report Labor Shortages Restraining Growth"
For the first time since 2013, the regional farmland prices expanded for eight straight months. May 14 

Farmland: "Bullish Land Price Outlook"
As goes the farmgate commodity basis, so goes the entire rural economy edifice, banking and finance, retail provisioners, land prices, the whole thing built upon the price of wheat. And corn. And soybeans. and cotton. And marijuana....

Landwatch
April 2021 Recent Farmland Sales

And more next week. In the meantime remember our oft-stated premise:

Farmland is worth it's discounted cashflow. Period.
It may sell for more but at some point it returns to trend. It can correct either in price or in time.

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