50 year farm mortgage would it be insane or logical for farm families?

[wrongway]

i remember doing the math on a house mortgage in early 80's when interest rates were %14 or higher. one extra payment a year in the early years of the amortization schedule took a whole year off the end. so every renewal we would make the extra payment...it sucked because it cost us a hot holiday when all our friends seemed to be going everywhere...thankfully interest rates came down and as the mortgage matured the principle got paid off way faster.
I cannot even fathom these insane amortizations...truly there is a reason they don't teach math basics anymore.

[the big wheel]

some good points but what s not being considered imo is rents are paid and gone they
give you no value other than an expense, owning dirt is balance sheet useful gives you options. Land values are not based solely on what the dirt grows or produces its many more things now. Other people other countries want other resources of the land ie potash minerals etc etc thats besides other countries wanting to ensure their food supply decades down the road. Land is not going to go down like it has in the past. Sask land is still undervalued compared to the rest of the country. And thats the biggest part of my question and whats being overlooked. When your land appreciates over 10 to 15% per year theres that value to add to the balance sheet as well which is more than what rent is. And I dont think its right that farmers arent the ones that have the access to that appreciation.

[Old Cowzilla]

Most farmers only have access to that appreciation on sale day and a fair bit of that is an estate sale. Does always feel different driving over owned land compared to rented but million dollar question is always how much dirt does a guy need (rented or owned ) to make a living ? I don't need to know but my son will have to figure it out.

[wrongway]

recent history does indeed show that ownership is far far better than renting.
having started farming in the 70's i can assure you that the 80's to 2010 or so it was a very different time. yes ownership was slightly better than renting but there was virtually no asset appreciation for these 30 years. the high interest rates and asset devaluation that occurred then brought down many farm families.

[Taiga]

Having that asset base is what gives you access to money to grow. Hard to buy much with little to borrow against, whether that be inputs, machinery, more land.

[ColevilleH2S]

...Land is not going to go down like it has in the past...

This time it's different, doesn't hold water with me. Cycles, cycle. Always have, always will.

[furrowtickler]

Is it more likely that land is overvalued in other areas than Sask ?
Or our dollar simply devalued and it enhances inflation ? It’s happen in many other countries where inflation is the cause of a devalued currency.
Not sure to be honest, but land values since 2000 have gone from about $100,000 a 1/4 to $600,000 plus now .
Long term crop production averages are up just marginally in that time frame .
But land values could definitely stay ever increasing , it is possible as well

[the big wheel]

This time it's different, doesn't hold water with me. Cycles, cycle. Always have, always will.

Well it may go down for a year or even 5 years but what asset whether it be land or stock market over 50 years has gone down? People build or buy houses in the city they depreciate the minute they re used yet how may people wish they owned many houses from 50 years ago now? And second foreign investment is way way understated there was a Producer article recently and it was quite obvious to me our govs have no clue how much foreign ownership there is now, many get citizenship then whats stopping a foreign gov to pump money through that person as an investor? And second who actually is checking on foreign ownership? the ones who have political friends that were part of the money land scams? To be honest I think if an independant look at land ownership were done it would shock people. Someone asked earlier if I was referring to area one farms or the other major one no I wasnt they arent immediately here but I know people have sold and there are people mainly from 3 different speaking languages at the end of the phone.

[Marusko]

How do the 100 year farm mortgages in Holland work? Kinda seems to me that there isn’t much difference between that and renting from the central bank/government

That cannot be real. Netherlands is in the process of buying out its farmers anyway.

[westernvicki]

The increase in Capital gains tax will be a huge disincentive to investors in capital in Canada.

But particularly for farmers due to aging demographics which will add more inventory to sales, high interest rates in debt being serviced with a dramatic reduction in farm income, all disincentives to high land costs.

How do you not see this as huge blow to farm capital values?

[Templeboy]

Is it more likely that land is overvalued in other areas than Sask ?
Or our dollar simply devalued and it enhances inflation ? It’s happen in many other countries where inflation is the cause of a devalued currency.
Not sure to be honest, but land values since 2000 have gone from about $100,000 a 1/4 to $600,000 plus now .
Long term crop production averages are up just marginally in that time frame .
But land values could definitely stay ever increasing , it is possible as well

I really don't think land prices can keep increasing (I do think its going to hold for a couple years where it is).

The combination of low Interest rates and a commodity supercycle caused the sudden increase. Lots of people with cash on the balance sheet were encouraged by some accounting firms to spend that money on hard assets (or you are going to be taxed). If you held your cash in grain inventory, you have already taken a haircut. By '26 or '27 many cheap mortgages will come due and there will be quite a bit of reallocating money to interest instead of principal payments. The free ride on equipment will soon be over, the lots are full of recent trades. Lots of equipment is leased so it looks balance sheet neutral, but many leases have the farmer responsible for the value at the end.

Everything will go along pretty easy until a few banks get burnt. Good times kill farms, not tough times. This is my opinion.

[LEP]

I really don't think land prices can keep increasing (I do think its going to hold for a couple years where it is).

The combination of low Interest rates and a commodity supercycle caused the sudden increase. Lots of people with cash on the balance sheet were encouraged by some accounting firms to spend that money on hard assets (or you are going to be taxed). If you held your cash in grain inventory, you have already taken a haircut. By '26 or '27 many cheap mortgages will come due and there will be quite a bit of reallocating money to interest instead of principal payments. The free ride on equipment will soon be over, the lots are full of recent trades. Lots of equipment is leased so it looks balance sheet neutral, but many leases have the farmer responsible for the value at the end.

Everything will go along pretty easy until a few banks get burnt. Good times kill farms, not tough times. This is my opinion.

I agree with alot of what you say.

But the 80's were good times???

[jamesb]

What comes to mind is from a few years ago when lots were buying boats and campers over really long terms just to make the monthly payment low enough to cash flow it on the wages earned. For me what I am seeing is land coming on the market that has been held by a family since homesteading times. The current price coupled with the fact the the farm isn't viable anymore has given the opportunity to acquire land previously thought not possible. I am old enough to remember the 80's and while it was bad for some others did just fine. An old farmer/ machinery dealer told me years ago something I have never forgotten. If you can have cash to spend when few others do you can have opportunities that few others do. Remember outfits willing to trade wheat for machinery? Cash is king.
Regarding land though it seems the world over that there is such an appetite for farm land ownership, its hard not to jump in and buy. I just have to try and not get over aggressive and stick my neck out too far.