We like to stick to the business side when we speak about "Why to buy land". This doesn't include the obvious enjoyment you will get from owning your own piece of heaven. Back to business, here are the real reasons people are buying land now.
Land has steadily increased in value over the last 30 years. We always hear the old adage “they don’t make anymore of it”, that really is true. Because of that it is one of the few assets that has a set supply, meaning it should increase as time goes on.
Rural Won Covid:
There is no argument about covid here, just observations. Rural areas have become more popular during covid. Many are interested in “lifestyle arbitrage” which plays into remote working. The more people are able to work from home and remotely they are taking their big city salary and choosing to live in an area with lower living costs.
Cities showed how vulnerable they are to supply basic living needs like, meat, toilet paper and recently baby formula. Rural areas give an opportunity to raise your own food or being very close to the source. Many of the buyers I have worked with have expressed some sort of reasoning in line with this in almost every transaction in the past two years.
The biggest risk to land prices is high interest rates. We have had historically low rates over the last couple years and thousands of acres have been transacted with locked low rates leaving them with manageable debt. Since 2008 and 1980’s interest rates have been regulated, so those tough times do not return. There is no promise, but if you can lock in current rates on 20-30 years notes you will be in a great position in relation to real estate issues in history.
Hedge Against Inflation:
As cost of living increases and inflation continues land has always been a healthy hedge. Real annual growth rates for farmland are in the range of 2% above the inflation rate over time. That is why farmland is considered a good hedge against rising inflation and why some are buying farmland today. People, rightfully so are concerned about the value of paper (cash) shrinking during aggressive inflation events, they turn to hard assets like land to maintain value. You may ask how that differs from stocks, which brings us to our next point.
Diversifying Investment Portfolio:
People are tired of the “yo-yo” effect they have seen on their stock portfolios over the last 3 years. Consistently stocks have been much more volatile in our history. Many are taking large percentages of their net worth and investing in land.
If you can find land with beauty and diversity is very appealing to people. We happen to serve one of the most diverse and unique areas in the midwest. The driftless region is home to some of the most unique landscapes that display true beauty that many search for.