Pulse Results

Pulse: Signs of a Brewing Land Bubble

Pulse: Signs of Brewing Land Bubble

According to the May LANDTHINK Pulse results, 74% of respondents believe that the warning signs of a land real estate bubble are flashing. If you tried to buy land for sale recently, you know it is not an easy task. Buyers are facing bigger price tags, paltry inventory, bidding wars, and often end up paying well over asking or abandoning the idea of buying land altogether. Current market conditions have many wondering if the nation is on the cusp of repeating the housing bubble from the early 2000s.

Last month, the May Pulse asked: Do you think we are in a land real estate bubble? 

Pulse Results: May 2022

A real estate bubble occurs when the price of housing rises at a rapid pace, driven by an increase in demand, limited supply and emotional buying. Underpinning that demand in the last few years have been factors such as pandemic-related lifestyle changes like remote work enabling geographic flexibility, and people seeking plenty of green space in areas with low population density. In a real estate bubble, properties are usually overvalued over a long period, generated by artificial demand, such as loose underwriting or speculative buying, but eventually the demand reduces or the market gets stagnant; at the same time, the supply rises, causing a steep fall in the prices. This will lead to a bubble burst, bringing prices down to more affordable levels. As last month’s survey revealed, many believe the warning signs of an impending bubble are all there.

There are clear similarities between what’s happening in the current market and the 2007 housing market crisis, but economists and many real estate agents agree that there are a lot of differences between what is happening now and what occurred when we were headed into the mid-2000s crash. Here are a few reasons why many believe consumers shouldn’t worry about a land market or housing bubble.

Low Supply, High Demand

Currently the land market and housing market is experiencing record-low inventories, and prices are at record highs. The influx of people to rural areas (particularly the Southeast) during the pandemic, exacerbated an already dwindling land inventory, and supply chain issues, and now the war in Ukraine, has compounded a home inventory problem by extending build timelines. It has also further increased material prices needed to build new homes. Compared to the 2008 financial crisis, the primary reason home and land prices have exploded is the low supply coupled with high demand from buyers fleeing the cities and flocking to rural communities.

Better Lending Practices

The 2007 housing crisis was fueled due to predatory lending and loose lending practices. Lenders made loans to buyers without regard for their ability to repay, and caused massive losses to investors in mortgage securities. Buyers with low credit scores and middle-class homeowners who wanted to take out a second lien on their home or a home equity line of credit had access to credit. People were buying homes with no money down. Today there is much more oversight in the loan industry, and adjustable-rate mortgage loans with balloon payments, which played a major role in the collapse, are much less common.


Americans have more equity in their properties today than ever before. As prices continue to rise, equity will too. The housing bubble was caused by a banking industry failure, and people were extending themselves beyond their means. Homeowners cashed out the equity in their homes, and the market dipped, and many people discovered that their loans were worth more than the homes. Foreclosures and short-sales followed, causing a nationwide depreciation in values.

People are Paying Cash

When the pandemic hit, there was an influx of out-of-state buyers to less-populated, safer, and more affordable rural communities. A lot of people sold their home in more expensive areas of the country and moved to the Southeast where they can get a really nice piece of land or larger home at a much cheaper price. Many of those buyers were willing to pay over the asking price.

While this is in no way intended as a crystal ball prediction, it should put your mind at ease that a land market bubble is brewing. The Federal Reserve took some air out of the crazed market when it began raising interest rates in March. Last Wednesday, the Fed raised interest rates by 75 basis points- its largest hike since 1994. Despite rising inflation, job creation is strong. There are many people that have the money to buy land or a home, but too few properties are available. While interest rates are increasing, prices are not decreasing.

The best advice advice for buyers of land or homes is to go into the purchase knowing that the property you are bidding on could rapidly lose value. If the worst happened and the market did burst or just returns to pre-pandemic values, anyone who overpaid could be left owing more on a property than it’s worth.

Soaring demand and exploding prices are unsustainable, and we’re most likely beginning to experience a shift. The land and housing market appears to be cooling off- not collapsing- and heading towards more balanced conditions from an unsustainable peak of last year.

Our informal online survey revealed that 74% of those responding think we are in a land real estate bubble. Only 26% of our audience said NO, we are not in a land real estate bubble.

Do you have a suggestion for next month’s Pulse question? Submit your question and we might choose yours!

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.

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  • One thing I have observed in the U.S. and worldwide is persons are uninformed or do not seek out information. LANDTHINK has done an excellent job of filling a very important and desperately needed aspect of that void. Keep it coming and keep me informed. Thank you.

  • There’s one caveat here, the rural land market is different from the residential land market as it pertains to inflated valuations; due to climate change, unless weather conditions turn for the better in the western plains and western US, rural land prices east of the Mississippi River will continue to increase; climate change has become a reality for ranchers and farms in the west, if their land production is being encumbered due to climate change, this will drive up land prices elsewhere, especially east of the Mississippi.

  • Bullshit, the War in Ukraine? Spare me that has been going on 8 years! Media blew that conflict up for Biden, Pelosi, Obama, Clinton’s money laundering. They are flooding us with illegals and Black Rock, Bill Gates, and China are buying up our land. A bunch of thug filled track homes bringing crime and drugs. Ruining communities. Baseless climate crisis, stupid equity bS, forced diversity that’s turning everything to shit. Go woke Go Broke. What happens When prices go down?, now just anybody can live there so my property goes down in price also all because someone’s greed. I pray the last farmer doesn’t sell his land by my house. I don’t even hear coyotes anymore. I was in the country, now there are housing developments and lagoons at my back door. I didn’t get a say in any of it. I’m basically in the city now. No expansion of roads. I can’t breathe. I don’t want a second mortgage but taxpayers pay for illegals housing. I really hoped the social distancing influenced housing. Realize people need more green Space between them and stop housing refugees and illegals. Instead focus on American communities. Fraudulent corrupt government OBiden is destroying all food resource plants and we are being invaded by military aged men. NWO has infiltrated our farm lands with fake carton farming. It’s all so ridiculous. I just want a secluded home away from all the drama and politics. Where are all the patriots or conservative land owners?

Pulse Question

What are land prices currently doing in your region?


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