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Land Prices No End in Sight


hobbyfarm
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51.5 acre place 2 miles down the road from me sold for $1,442,000 yesterday.  They sold it by the acre (28,000 an acre).  These were Lancaster County prices not long ago.  Nothing there to make money.  A decent farm house, an old bank barn, and a 30x60 shop.  No livestock facilities of any kind.  The Mennonites were the winning bid.  I can't wrap my head around it.  

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8 minutes ago, hobbyfarm said:

51.5 acre place 2 miles down the road from me sold for $1,442,000 yesterday.  They sold it by the acre (28,000 an acre).  These were Lancaster County prices not long ago.  Nothing there to make money.  A decent farm house, an old bank barn, and a 30x60 shop.  No livestock facilities of any kind.  The Mennonites were the winning bid.  I can't wrap my head around it.  

What county are you in?

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11 minutes ago, 766 Man said:

  Can't beat a "gotta have it" mentality where the land is amortized over multiple generations (used to be 50 years using non-commercial lending).  The kids are expected to kick in financially and I have heard kids start work around 10-11 years of age.  

My understanding is parents usually take 10% of the children's earnings while they live at home.   Not saying that is the deal on this property. 

Don't forget the was a runner up at $27,700 per acre and a few other bidders.  It's nuts.  Pretty sure it was a young couple.  

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21 minutes ago, hobbyfarm said:

My understanding is parents usually take 10% of the children's earnings while they live at home.   Not saying that is the deal on this property. 

Don't forget the was a runner up at $27,700 per acre and a few other bidders.  It's nuts.  Pretty sure it was a young couple.  

  Going by what some of the more "open" Mennonites say around here I would say it is much higher than 10 percent.  Competition got so fierce among them that the new comers pretty well ended the 50 year or 2-3 generation payoff on land.  There are only so many "legit" ways to come up with that kind of money.  Their crops and livestock efforts are really no different than the English.  They sell to the same elevators, mills, and milk coops.  

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6 hours ago, Art From Coleman said:

Looks like you got one to many ZEROS in the price per acre.

60 acres at $100K per acre is SIX million

Yea my bad, I didn't proof read,but hey if I was selling that 60 acres I take 60 million instead of 6 any day of the week 

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8 hours ago, stronger800 said:

Oh thank goodness. I was thinking 60 million was ridiculous, but only 6 million, yeah that’s totally fine

Unfortunately that is true near us, there was a 50 acre piece sold for $1 million per acre, and across the street a 60 acre piece also brought $1 million per acre. All will have warehouses on them

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14 hours ago, red farmer said:

Unfortunately that is true near us, there was a 50 acre piece sold for $1 million per acre, and across the street a 60 acre piece also brought $1 million per acre. All will have warehouses on them

With all the supply shortages, what the heck are they gonna put in those warehouses???

Mike

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55 acre farm a couple miles away brought double that a week ago, 2.965 I think, 53,000 an ac or so. Preserved farm bought by neighbor. Good ground, has buildings but no livestock facilities etc. Then another one nearby brought 54,000 a couple days later. 

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3 hours ago, Dirt_Floor_Poor said:

The amount of money floating around is just crazy. The amount of money that some farms have is also mind blowing. 

  It's all what lengths a person is willing to go through.  The Amish and Mennonites have gone to 100 year plans to pay off ground.  Are you and your family willing to do that?  The families have children work for income that is kicked back into the household.  Any of us would be put in jail for making a 10 year old work 30 plus hours per week.  No doubt it is chalked up as mom or dad is just fast when explaining a big pile of lumber or quilts.  Some farms are swimming in cash but most are using other methods to make purchases.  

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1 hour ago, 766 Man said:

  It's all what lengths a person is willing to go through.  The Amish and Mennonites have gone to 100 year plans to pay off ground.  Are you and your family willing to do that?  The families have children work for income that is kicked back into the household.  Any of us would be put in jail for making a 10 year old work 30 plus hours per week.  No doubt it is chalked up as mom or dad is just fast when explaining a big pile of lumber or quilts.  Some farms are swimming in cash but most are using other methods to make purchases.  

You still have to have the money in the first place. You can figure whatever time frame for payback you want, but without access to the money in the first place you’re not going to bid. 

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1 hour ago, Dirt_Floor_Poor said:

You still have to have the money in the first place. You can figure whatever time frame for payback you want, but without access to the money in the first place you’re not going to bid. 

Most sales at least around here the seller offers to finance.  That typically is the key to these fantastic land prices.  That is why most land around here does not reach the cash only stage of an auction or realtor.  The fall off is quite substantial in terms of the offer if it has to be a cash deal.  Farm real estate brokers which were very common and each county had a couple are just about a thing of the past.  The one broker that does any business is in vegetable ground country where the BTO's are goaded into wild offers and the religious orders are pretty much absent.  

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36 minutes ago, 766 Man said:

Most sales at least around here the seller offers to finance.  That typically is the key to these fantastic land prices.  That is why most land around here does not reach the cash only stage of an auction or realtor.  The fall off is quite substantial in terms of the offer if it has to be a cash deal.  Farm real estate brokers which were very common and each county had a couple are just about a thing of the past.  The one broker that does any business is in vegetable ground country where the BTO's are goaded into wild offers and the religious orders are pretty much absent.  

Owner finance hasn’t been a thing here for 40 years. That would change things if that is how they sell land there. People here want the money in their hand. 

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1 hour ago, Dirt_Floor_Poor said:

Owner finance hasn’t been a thing here for 40 years. That would change things if that is how they sell land there. People here want the money in their hand. 

That hasn’t been a thing here either. But even so I’m sure landowners aren’t financing for 50 years, still need cash to make payments. 
Banks aren’t financing land at the $20k an acre you are seeing sales in my area. Don’t know for sure but have been told they will only finance $6k to &7k/acre. So you either need cash or equity in other land. And apparently farmers have 1 or the other.

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26 minutes ago, IH Forever said:

That hasn’t been a thing here either. But even so I’m sure landowners aren’t financing for 50 years, still need cash to make payments. 
Banks aren’t financing land at the $20k an acre you are seeing sales in my area. Don’t know for sure but have been told they will only finance $6k to &7k/acre. So you either need cash or equity in other land. And apparently farmers have 1 or the other.

The problem I have had is that my lender won’t value my farm at $10,000/acre even though they are selling for that. It will take years and years of sales at that level here before they will admit that is what it is worth. They still value my land at close to what I paid and it isn’t nearly $10,000/acre. If I wanted to buy a farm at that price I would have to have most of it in cash. 

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1 hour ago, Dirt_Floor_Poor said:

Owner finance hasn’t been a thing here for 40 years. That would change things if that is how they sell land there. People here want the money in their hand. 

  People don't want cash that bad if the bank will do at best 3,000 dollars per acre.  There are sellers who openly wish that the buyer defaults so they can repo the land and sell at an expected increase in value.

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36 minutes ago, IH Forever said:

That hasn’t been a thing here either. But even so I’m sure landowners aren’t financing for 50 years, still need cash to make payments. 
Banks aren’t financing land at the $20k an acre you are seeing sales in my area. Don’t know for sure but have been told they will only finance $6k to &7k/acre. So you either need cash or equity in other land. And apparently farmers have 1 or the other.

  I would ask how most buyers can afford 20-30 thousand dollars per acre unless they are cashing out some very expensive ground usually in the shadows of a major city.  Farmers around here who I would consider good operators and not members of a religious order are not driving these prices.  In fact most have lost ground in the last 20-30 years.  Most around here are not even 2,000 acre operations where the annual income can chew on paying 20,000 dollars per acre for 50 acres.  Unless a niche market for a specialized product the price of corn, soybeans, or milk is no different from one farmer to the next.

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