We’ve all heard the old adage, “Invest in land, they’re not making any more of it.” Dave Milton, founder of AlaLandCo, once had a conversation with an older man who was knowledgeable about the land industry and this expression came up. The man said, “Sure it is, look right here.”, as he pointed to the obituaries in the daily paper.
I think we understand the concept of a fixed-amount of land, but in the past twenty-four months we are seeing an increasing supply of tracts of land that are being made available for the first time, or at least the first time in generations. I just closed on a property in Perry County, Alabama that had never even filed paperwork for the land patent from the state.
I am not naturally a person who is given to lots of speculation about the future, and I have been known to have the opposite of the “Midas touch” when it comes to new business start-ups. But as I was driving home from the Alabama Realtors’ Land Institute meeting today I was pondering the question, “Where is the next group of land buyers going to come from?”
With tough times still hanging around, many landowners are currently looking to turn rural tracts into stacks of cash. The recreational property buyer boom of the early part of the decade is over, and land prices are coming back down to more reasonable levels. Currently there is a glut of rural properties on the market, and if Congress does not act quickly to change the tax code, then I suspect there will be an even greater number of properties available in the next two or three years due to the estate tax being astronomical.
So who is going to buy all of this available land? Some of the analysts I read and listen to say that personal incomes have been relatively flat for the past five to seven years and that Americans are returning to a more austere mindset and becoming savers again. (Our grandparents would be proud.) So in the short run, I think it is possible we will see a continued slow-down in the number of rural land purchases due to all of the afore-mentioned factors plus high unemployment rates.
However, if Americans really do become savers again, then it seems very probable that eventually people will have more capital to invest in rural land. Many buyers I meet with now are people who have saved cash, and are looking to put that into a piece of land. It would be a very encouraging prospect for me to think about a nationwide reversal of habits and people becoming savers versus spenders. That reversal would make a more stable and sustainable land market because purchases would be made with cash and not credit.
I am not an economist, a forecaster, or even a decent prognosticator, but I am encouraged about the future of the land market. Most wise people see things from a long-view and do not concentrate on the quick fixes or patches that smooth things over. I would say the land market may be a little bumpy in the immediate future, but it could lead to a long and stable market in the future.
This content may not be used or reproduced in any manner whatsoever, in part or in whole, without written permission of LANDTHINK. Use of this content without permission is a violation of federal copyright law. The articles, posts, comments, opinions and information provided by LANDTHINK are for informational and research purposes only and DOES NOT substitute or coincide with the advice of an attorney, accountant, real estate broker or any other licensed real estate professional. LANDTHINK strongly advises visitors and readers to seek their own professional guidance and advice related to buying, investing in or selling real estate.