At precisely twelve noon on September 16, 1893 a cannon’s boom unleashed the largest land rush America ever saw. Carried by all sorts of transportation – horses, wagons, trains, bicycles or on foot – an estimated 100,000 raced to claim plots of land in an area of land in northern Oklahoma Territory. There had been a number of previous land rushes in the Territory – but this was the big one.
Many would be disappointed. There were only 42,000 parcels of land available – far too few to satisfy the hopes of all those who raced for land that day. Additionally, many of the “Boomers” – those who had waited for the cannon’s boom before rushing into the land claim – found that a number of the choice plots had already been claimed by “Sooners” who had snuck into the land claim area before the race began. The impact of the land rush was immediate, transforming the land almost overnight.
Over 100 years later, we are in the midst of a second rush for land. When it is over it will go down as the greatest land rush in United States history far eclipsing the Oklahoma land rush of the 1890’s.
How will it be different? Baby Boomers, investors and institutional investment firms are preparing to buy over one-half of the useable land in the U.S. in the next ten years. Are you aware there is approximately 1.6 billion acres (Yes, billions – with a big B!) that can be bought and sold? The potential is for millions and millions of land deals in the next few years.
Just like the previous “land rush”, the demand for land it is going to transform who owns land in our country and what they are going to use it for.
In last month’s article, I wrote how Baby Boomers are buying land in all shapes, sizes and types. Let’s read what the media is saying who else is participating in this modern day rush for land:
Wall Street Journal
“Is it still possible to make money in real estate? With home prices continuing to plummet, many people have finally stopped seeing their family manse as a big bottomless bag of cash. But look beyond your front door, and you’ll find some alternative real-estate related opportunities that are holding up despite the current economic downturn including rural land. Rising food prices, demand for corn-based ethanol and a growing desire by many urbanites for a place in the country are making rural land more valuable.”
The New York Times
“The real estate market may have cooled, but investor demand may soon be heating up for at least one type of property: LAND. Some of the most attractive deals lately have come from land developers and home builders, who are divesting parcels in many parts of the country as they whittle down excess housing inventory. Even smaller landowners, facing their own financial strains, are selling off lots once meant for building.”
“The time is ripe to start looking; I haven’t seen this market in 20 years,” said Jaime Raskulinecz, a real estate investor from NJ, who wants to buy land in the hard-hit market of Cape Coral, FL. She found lots for sale on or near the water at about a third to half below their peak prices of two years ago. On a larger scale, H. Ray Alcorn Jr., an investor in VA, is picking up commercial and residential parcels after two years on the sidelines. Mostly using cash, he has bought more than 100 acres throughout Virginia this year, much of it at reduced prices, and he has options to buy more.”
“…farmland is having its biggest revival in almost 30 years as demand for corn and soybeans from Asia and the ethanol industry drive commodity prices to record highs. From Iowa to South Dakota to Wyoming, gains in rural land prices have ranged from 78 percent to more than 200 percent, according to farmers and data from Farm Credit Services of America.” “TIAA-CREF, the largest U.S. manager of retirement funds, bought $340 million of farmland in seven states in December. George Washington University plans to earmark $100 million for agricultural investments during this year. “
“Farm values probably will rise at an annual rate of 6 percent to 10 percent in the next five years,” said Murray Wise, the CEO of Westchester Group Inc., manager of $550 million of global farm tracts. In comparison, the median U.S. home is forecast to gain 1.2 percent through 2010 and stay below the 2006 peak of $221,900, the Mortgage Bankers Association in Washington said.
“It’s just crazy out there right now,” said Mac Boyd, 65, a real estate broker in Arcola, IL, who has sold farms for more than three decades. “The land market has never been stronger.”
www.landflip.com, the premier land website, recently conducted a poll asking “When are you likely to purchase land?” 73% responded said they plan to purchase land in the next 12 months!
What is creating such an interest in land?
Retiring Baby Boomers – In my previous article, I documented that many Boomers are nearing retirement. Here is a snapshot of this group:
- 10,000 Boomers will retire every 24 hours!
- 17 trillion dollars are going to flow out of retirement accounts over the next two decades into the hands of Boomers.
- 1 in 4 Boomers own more than one piece of real estate.
- 1/2 of Boomers own their home free and clear.
- 60% of Boomers plan to move to a rural setting.
Since 1 in 4 Baby Boomers own more than one property, the logical conclusion is they will allocate a portion of their investment portfolio and buy land in the near future.
Baby Boomers are buying land, but most unlikely to ever move on the property
Where are Boomers going to relocate when they retire? In a poll commissioned by the National Association of Realtors, 60% plan to move to a rural area upon retirement. The operative word is PLAN. Many are in the process of purchasing small and large tracts of land all around the country to fulfill their future dream. Chances are that they will never move on to the property. Nonetheless, everyday there are more and more Boomers entering into the land arena to buy their dream property – and they are ready to buy soon!
Stock market and the drive toward buying land
As in most economic cycles, there are times when the stock market has not performed to investor’s expectations. When the stock market is doing well there is no reason for investors to look elsewhere to secure a modest return on investment. But, as we know, the stock market is mired in uncertainty. Because of this, some investors look for other investment options such as hard assets. Both individual and institutional investors are looking to land as one safe haven to relocate part of their investment portfolio. This translates that billions of dollars will be moved into land over the next few years.
As an example, the demand for hard assets appeared in FL in 2004 and 2005. In 2003 and 2004 the overall stock market results were flat. Investors were unsatisfied with the returns and began to look for investments outside the stock market. Some turned to real estate, (i.e. condos, preconstruction projects, rehabs etc.) particularly a drive to buy land. At the time, I was associated with a real estate office in rural Florida that only brokered land. By early 2005, the office received contact from a new buyer every 15 minutes! They learned investors wanted to buy for two reasons: (1) for investment and; (2) to build on the property at retirement. 80% of the buyers bought site unseen and lived far away from the property.
The brokerage (as well as many other brokers in Florida) could not keep pace with the demand as there were more buyers than sellers. So, I and a few other investors went out to coax landowners to sell their property. In the end, this one office brokered 1000’s of land deals ranging from a .25 acre to 500 acres.
The demand for land is reoccurring again but this time it is happening nationwide! Also, there are brokers reporting around the country that they have more buyers than sellers. That is a great dilemma to have! If the stock market continues to be volatile, more and more investors are going to look to land to fulfill a part of their investment needs. Some are buying land like it is a stock and betting that it will increase in value over the next 5 to 10 years and beat stock market returns.
Don’t be left behind! Be a part of the next great land rush!
When the dust settled, many walked away from the Oklahoma land rush disappointed and empty handed. Don’t sit on the sidelines any further waiting for the next opportunity. You can say to your children that you were part of THE greatest land rush in US history! There simply isn’t a better time to profit from land!
In the next few years there will be millions and millions of land transactions. I specialize in finding sellers – and you can too. The marketplace needs investors like me to find affordable land for this new generation of buyer.
Some of you are saying, “Can I really buy and sell land?” Land is by far the simplest, easiest form of real estate on the planet. Don’t be intimidated because you have never done something like this before. The marketplace desperately needs more investors to step into this once-in-a-lifetime opportunity. Won’t you join me?
Buy land. They’ve stopped making it. – Mark Twain
As featured in October 2008 issue of INVEST Magazine
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