Interesting "historical" numbers.  

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Interesting "historical" numbers.

 
Oct 26, 2020 | 08:38 1 Name:  20201026_083344~3.jpg
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Some say the repeat of late 80's early 90's won't happen. Reply With Quote
Oct 26, 2020 | 08:42 2 The value of a 10-15% drop in today's land values is what I paid for most of my land....lol.

Multiple years of those decreases and it gets real ugly.

But it can't and won't happen.....ever! Reply With Quote
  • 1 Like


  • Oct 26, 2020 | 08:45 3 Im not sure it’s actually a rise in farmland value but more of a indiction of inflation. I think a machinery cost $ chart would show similar increases. Reply With Quote
    blackpowder's Avatar Oct 26, 2020 | 08:47 4 Depends on interest rates. Reply With Quote
    Oct 26, 2020 | 08:58 5
    Quote Originally Posted by BreadWinner View Post
    Im not sure it’s actually a rise in farmland value but more of a indiction of inflation. I think a machinery cost $ chart would show similar increases.
    Ahem, I doubt farm machinery prices went down. Reply With Quote
    Oct 26, 2020 | 09:00 6 I honestly think some land is being traded around here at values that investors aren't even interested in.

    I wonder if the party is just about over? Reply With Quote
  • 1 Like


  • Oct 26, 2020 | 09:28 7
    Quote Originally Posted by farmaholic View Post
    I honestly think some land is being traded around here at values that investors aren't even interested in.

    I wonder if the party is just about over?
    Imho Canada will be flirting with negative interest rates this time. In that scenario assets like land will rise.

    This is a whole new ball game. Reply With Quote

  • Oct 26, 2020 | 09:55 8 I have no land bought that even a 50% correction would hurt me. Hell, not even a 75% correction off today's values.

    I'm good to go.....

    Current values make me nervous. But so did the purchase price of land I bought 15 to 35 years ago, lol.

    Is it ok to "lol" now? Reply With Quote

  • Oct 26, 2020 | 10:05 9
    Quote Originally Posted by farmaholic View Post
    I have no land bought that even a 50% correction would hurt me. Hell, not even a 75% correction off today's values.

    I'm good to go.....

    Current values make me nervous. But so did the purchase price of land I bought 15 to 35 years ago, lol.

    Is it ok to "lol" now?
    It is never ok to lol, now that the precedent has been set by the chronic lol'er.
    Make Agriville Great Again. Reply With Quote

  • Oct 27, 2020 | 07:34 10 As interest rates fall, asset prices will rise. The trend in farmland values, especially since 2008, fits this pattern perfectly. It will be interesting to see what mayhem occurs when interest rates go negative across the board. Reply With Quote
    Oct 27, 2020 | 07:55 11 It appears fcc and rhe gov if Canada have a mandate of less farmers and more farms owned by Non farmers. I don’t know about other areas but mega farms built in last 5 years around here and some no one even knows who really owns them. Reply With Quote
    Oct 27, 2020 | 08:18 12
    Quote Originally Posted by Austrian Economics View Post
    As interest rates fall, asset prices will rise. The trend in farmland values, especially since 2008, fits this pattern perfectly. It will be interesting to see what mayhem occurs when interest rates go negative across the board.
    Have we ever been there before?

    Who knows where we're headed when central bank's rudders break and fall off.

    Rough seas, uncharted waters, might sink.

    Loss of control?

    Out of options?

    What comes after negative interest rates? Reply With Quote
    Oct 27, 2020 | 08:24 13 I think the party is over...

    You see andejilic land for sale ( the largest landowner in saskatchewan) and other large packages being sold by Toronto investor groups... Reply With Quote
    Oct 27, 2020 | 08:25 14
    Quote Originally Posted by the big wheel View Post
    It appears fcc and rhe gov if Canada have a mandate of less farmers and more farms owned by Non farmers. I don’t know about other areas but mega farms built in last 5 years around here and some no one even knows who really owns them.
    Its been government policy for decades.... Reply With Quote
    Oct 27, 2020 | 08:30 15
    Quote Originally Posted by farmaholic View Post
    Have we ever been there before?

    Who knows where we're headed when central bank's rudders break and fall off.

    Rough seas, uncharted waters, might sink.

    Loss of control?

    Out of options?

    What comes after negative interest rates?
    The end result of negative interest is a currency collapse. The division of labor starts going into reverse and a subsistence economy emerges. Of course, a subsistence economy can't sustain the population we have today. So one hopes that gold returns to its proper role as money. Reply With Quote
    Oct 27, 2020 | 08:33 16
    Quote Originally Posted by bucket View Post
    I think the party is over...
    Before covid, I would have said that too, but after seeing our govts print up trillions and hammer rates down to 025%, history tells me that is simulative for the time being and will go somewhere usually into hard assets. Reply With Quote
    Oct 27, 2020 | 08:34 17
    Quote Originally Posted by bucket View Post
    I think the party is over...

    You see andejilic land for sale ( the largest landowner in saskatchewan) and other large packages being sold by Toronto investor groups...
    Farmers are going to be sucked into the vortex of paying high land prices.....

    when the investors who enjoyed parabolic appreciation cash out.

    Boy is it easy to get off topic. Reply With Quote
    Oct 27, 2020 | 09:09 18 Is high priced land a bad thing?

    There are many other cost contributors, and income that impact the bottom line. It’s a component, don’t be blinded or focus on that one line item.

    When looking at the chart is there any past year where you would have made a bad vestment buying land? Reply With Quote
    Oct 27, 2020 | 09:16 19 Over what time frame? Reply With Quote
    Oct 27, 2020 | 09:25 20
    Quote Originally Posted by Rareearth View Post
    Is high priced land a bad thing?

    There are many other cost contributors, and income that impact the bottom line. It’s a component, don’t be blinded or focus on that one line item.

    When looking at the chart is there any past year where you would have made a bad vestment buying land?
    Any time between 1980 and 1986. Many went deep into debt and didn't last till the 90's Reply With Quote
  • 2 Likes


  • Oct 27, 2020 | 09:27 21
    Quote Originally Posted by farmaholic View Post
    The value of a 10-15% drop in today's land values is what I paid for most of my land....lol.

    Multiple years of those decreases and it gets real ugly.

    But it can't and won't happen.....ever!
    Going by my questionable memory, 20 years ago a lot of good farmland sold for 8x assessment or 350-400 per cultivated acre. Interest rates were about 7% and a land payment was actually lower than a rent payment than based on 15 years of payments with 25% down payment.
    Now the financial industry doesn’t focus on land quality or assessments and everything is a certain $ per cultivated acre regardless of soil type, rocks, yield potential, etc. Also now anyone with a pulse is approved at low interest rates with longer terms.

    2000-2020 it looks to me like a 500-600% increase in farmland values but interest rates are much lower and longer terms are common with smaller down payments. Reply With Quote
  • 1 Like

    brs

  • Oct 27, 2020 | 09:37 22
    Quote Originally Posted by Oliver88 View Post
    Going by my questionable memory, 20 years ago a lot of good farmland sold for 8x assessment or 350-400 per cultivated acre. Interest rates were about 7% and a land payment was actually lower than a rent payment than based on 15 years of payments with 25% down payment.
    Now the financial industry doesn’t focus on land quality or assessments and everything is a certain $ per cultivated acre regardless of soil type, rocks, yield potential, etc. Also now anyone with a pulse is approved at low interest rates with longer terms.

    2000-2020 it looks to me like a 500-600% increase in farmland values but interest rates are much lower and longer terms are common with smaller down payments.
    Agree

    Be interesting to match that up with farm “net” returns over that same period ..
    Low interest rates or not , my guess is that in reality it will show that it’s not sustainable.. at all , anywhere .
    Actually show land values , machinery costs and inputs against average net returns over that time period . It would point out a stark reality to why some believe land in Sask is way overpriced regardless of the small advantage in lower interest rates .
    That same acre of dirt still needs to pay for the massive increase in overall costs . Reply With Quote
    Oct 27, 2020 | 11:16 23 I remember the 80’s , looking back 25 years

    Farming sucked, poor crops, summer fallow, low yields, low commodity prices, low land prices, no holidays, no new houses, no new equipment, young people moved to Alberta. The problem was margins, no room for profit.

    If you don’t have own land, equity,security, etc farming is impossible, that’s why land prices are going up. It’s a fixed cost and Huts amortized over 50 years, investors want security and 2 or 3 percent return on dollars invested + capital appreciation opportunity( every realtor uses that chart and they delete the 80’s)

    Land is better investment than machinery, new automobiles, etc. We were the lowest paid professionals in Canada, that has changed somewhat. Housing prices in urban area of sask chart would look similar to farm land prices or show even better returns. Reply With Quote