| Reality speaks - 5/3/2024 21:51
The bulls will never believe it until its too late. The economic calculus on land values has not changed. Cash return divided by cost of capital = land value. cash returns are going down and cost of capital is going up. does not equal land values going up or holding steady.
Average cash return on Corn Soybean grain farm in the prime area of the corn belt assuming 50-50 rotation is about $350/ac 10 year t-bill (4.50)plus 125 basis points margin = 5.75% cost of capital = $6100/ac not $16,000/ac So tell us land bulls what is going to change to continue to justify the $16,000/ac + land sales?
Oh and I want just one to say that its different this time.
Yup. And in your assessment above you assumed the average for this area, which I would assess 75 CSR as an average baseline for this immediate area, so this farm was slightly below average for the area, but still 71 CSR is pretty respectable. And using your formula to appraise a tract from afar is still pretty doggone accurate. Puts a person in the wheelhouse anyway. Any values higher or lower than your appraisal, are strictly curb appeal to the buyer, in other words, how tall does the farm stand makes a difference. But not ten thousand worth.
Edited by Boone & Crockett 5/4/2024 06:04
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All you land bulls may not want open this thread; Auction results
