On The Other Side Of Over-Optimism
NBC News reports on Iowa. “In agricultural communities across the country, financial worries are growing as quickly as farmers’ unprofitable crops. They’re suffering from the worst agricultural slump in more than a decade — and a major source of federal assistance has run dry. In Durant, Iowa, a rural town of less than 2,000 residents, the punishing combination of economic factors, including a plunge in commodity and farmland values, is bringing in more farmers than usual to lenders at Liberty Trust and Savings Bank, said bank vice president Michael Hein.”
“‘Right now, we’re dealing with a depression in all of our commodities, livestock, and grains. We have corn and beans that are both priced below production costs, and our cattle market has taken a downturn,’ Hein told NBC News. ‘It’s an across the board situation right now.’”
The Forum News Service on Minnesota. “Farmland values in west central Minnesota have softened, still sliding from the peak reached in 2013-14 when commodity prices were at their high too. Believe it or not, until the housing bubble burst, urban sprawl in the Twin Cities had a ’significant’ impact on farmland values in west central Minnesota. Developers were making lots of money and investing in farmland to defer capital gains taxes.”
“Some ‘had so much money in their pockets they needed to spend it somewhere, somehow. Many didn’t even negotiate it much, just purchased what was available,’ said Bryan DeGroot, owner of DeGroot Farmland Sales in Prinsburg. The bubble burst and stock prices tumbled. Still, investors continued to drive up farmland values through the years 2000-2010, DeGroot said.”
The Associated Press on Kansas. “A new government report shows the value of land and buildings on Kansas farms fell 7 percent last year. The National Agricultural Statistics Service said Friday farm real estate value in 2016 averaged $1,880 per acre. That is down $150 per acre compared to the previous year. Cropland values fell 7 percent to $2,050 per acre. Cropland with irrigation averaged $3,000 an acre, down $270 per acre. Cropland without irrigation averaged $1,940, down $150 an acre. Pastureland was valued at $1,290 per acre, down $100 per acre.”
From Hoosier Ag Today on Indiana. “The new 2016 Purdue Farmland Value Survey confirms that Indiana farmland values continue their downward trend. The average declines are 8.2 to 8.7 percent depending on land quality, and declines of this size haven’t been seen since the mid-1980s. Purdue agricultural economists Craig Dobbins and Kim Cook are the report authors and Dobbins told HAT it’s obvious what has values in retreat. ‘We’re adjusting to the lower income environment, the lower price environment, the lowered expectations about what prices are going to be in the future. Those sorts of things are really beginning to have an impact now. The evidence is pretty clear that we’re in a re-adjustment process when it comes to farmland values.’”
“The average farmland value has fallen about 13 percent over the last 2 years. The drop follows several years of spikes in the prices paid for farmland. ‘Yes, there was probably some over-optimism that was in the market,’ Dobbins says, ‘and now maybe we’re on the other side and of that and there’s over-pessimism in the market.’”
Eagle Country Online on Indiana. “According to the report, the downward trend in farmland values was consistent across the five regions of the state. ‘The collapse in grain prices and the impact of tighter gross margins are working their way through the agricultural economy,’ said Purdue agricultural economists Craig Dobbins and Kim Cook, authors of the report. ‘In addition, the farmland value change in this region did not support the conventional wisdom of top-quality land maintaining its value better than lower-quality farmland in a downturn,’ they wrote.”
‘investors continued to drive up farmland values through the years 2000-2010′
Long time readers will recall we’ve looked at this subject from time to time. A bunch of these investors were institutional, and they threw a lot of money at farmland.
‘Farmland values in west central Minnesota have softened, still sliding from the peak reached in 2013-14 when commodity prices were at their high too’
About the same time oil was high and metals. Hmmm, pretty much everything was boom-boom when China had her QE high heels on.
‘Farmland prices can teach investors a lot about asset bubbles
By William Watts’
Published: June 26, 2015
‘As recently as 2013, a sharp rise in U.S. farmland prices was prompting warnings. But since then, prices for prime crop-growing dirt have started to soften, but gently and with few ill effects.’
‘First off, fears of the “next bubble” are understandable. Investors can painfully recall the collapse of two investing bubbles within a decade of each other: the tech bubble in 2001 and the housing bubble in 2007. Both had devastating effects on portfolios, while the latter also served to trigger a devastating global financial crisis.’
‘When it comes to farmland, it was Kansas City Federal Reserve Bank President Esther George who made clear in January 2012 that soaring prices were on the radar. She noted at the time that each week seemed to bring “a new tale of dizzying prices at the most recent farmland auction” and that “well-informed, concerned voices” across the region were wondering if these marked a potential bubble.’
‘Her concern certainly seemed justified. After all, it was the collapse of a credit-fueled 1970s farmland bubble that led to the devastating farm crisis of the 1980s.’
‘In the case of farmland, the most recent rise resulted in the average value of an acre of Iowa farmland nearly quintupling between 1999 and 2013, according to Iowa State University’s long-running annual farmland survey. Price gains accelerated sharply beginning in 2004, posting double-digit percentage gains in eight of the following nine years.’
‘It was a similar story elsewhere in the Corn Belt. But, as the chart above shows, the rise also accompanied a massive rally in crop prices fueled by surging demand in China and emerging markets, which in turn fueled a large jump in farm income.
Since then, however, crop prices have fallen back sharply in the wake of a pair of bumper crops of corn and soybeans. Farm income, which tends to be volatile, is projected to fall sharply in 2015.
Meanwhile, the average price for Iowa farmland fell nearly 9% in 2014 to $7,943 an acre, according to the Iowa State survey. Farmland data from regional Federal Reserve Banks also show a softening of prices across prime row-crop growing areas of the Midwest.’
“The fundamentals were good. Now they’re less good and the market is behaving accordingly,” said Brent Gloy, an agricultural economist at Purdue University.’
‘The recent pullback in commodity prices and farm income has, so far, led to an orderly softening of farmland prices rather than the collapse that would offer the telltale, after-the-fact confirmation of a bubble.’
“It is good that we’re seeing the markets react in a way that you would expect them to react. It would be probably more concerning if we saw corn prices go from $8 to $3 and there not be any correction or any adjustment in the pace of land price growth,” said Nathan Kauffman, an Omaha-based economist with the Kansas City Fed.’
‘Still, there is a sense that the farmland market will remain orderly as crop prices and farm incomes drop. So was it wrong for regulators and economists to worry? Probably not, said Gloy. It made sense for the Kansas City Fed, in particular, to be out front sounding the alarm.’
“We have had a bubble in agriculture (in the past) and it wasn’t pretty,” he said. “From the regulator’s standpoint, I think it makes sense to say these things can get out of control [and to remind people] of the fundamentals.”
‘It would be probably more concerning if we saw corn prices go from $8 to $3 and there not be any correction or any adjustment in the pace of land price growth’
‘Losses were highest in the Northern Plains. The biggest drop was in Kansas, down 7.4 percent to $1,880 an acre. The Corn Belt remained the most-expensive region, even as prices fell 0.9 percent to $6,290 an acre. Rhode Island is the costliest state to own farmland, at $13,800 an acre, while New Mexico is cheapest, at $520 an acre.’
‘Corn and soybeans, the two most-valuable U.S. crops, have dropped from records in 2012. As of Friday, the grain fell 61 percent to $3.3425 a bushel from the all-time high of $8.49, while the oilseed declined 45 percent.’
‘In February, the USDA said declining commodity prices will push farm income down 2.8 percent to $54.8 billion this year, less than half the 2013 record.’
“Both booms were accompanied by sharp increases in commodity prices accompanied by relatively low interest rates.”
I don’t recall low interest rates in 1980 as the author suggests. I do remember growers increasing their land ownership with predictable results.
My above comment is in response to :
Farmland prices can teach investors a lot about asset bubbles
By William Watts
Folks who take on debt are rewarded with humongous equity windfalls. Well most of the time if your timing is right.
Lower prices are good for everyone…. in 3…2….1
Submit to the FED and support the wealth effect!
A way to match the billionaires buying up farmland - CNBC.com
http://www.cnbc.com/…/getting-your-plot-of-american-farmland-.html
CNBC
Jan 21, 2016 - Altscher said a major concern among investors that’s kept these stocks down is the chart on farmland prices being extremely high relative to …
Another Bubble Pops: Price Of Farmland Suffers First Annual Decline …
http://www.zerohedge.com/…/another-bubble-pops-price-farmland...
Zero Hedge
Farmland Prices Decline Across Parts of Midwest - WSJ
http://www.wsj.com/…/farmland-values-fall-across-muc...
The Wall Street Journal
Nov 12, 2015 - Farmland values fell in parts of the Midwest in the third quarter, reflecting a downdraft in the agricultural sector driven by three years of lower …
Oct 20, 2015 - Farmland prices in Illinois decreased modestly during the first half of 2015, and it appears that downward pressures are likely to continue into …
Farm Land Prices Continue Decline, More Expected In Next Quarter …
http://www.valuewalk.com/2016/05/farm-land-prices-crash/
May 25, 2016 - The downward turn in US farm land prices has continue again this month, although at a slower rate, with continued signs of decline in key …
U.S. Farmland Values Drop For 28th Consecutive Month - ValueWalk
http://www.valuewalk.com/2016/03/farmland-values-drop-again/
Mar 21, 2016 - U.S. farmland prices have continued their spiral downwards for a 28th successive month owing to drought concerns.The US farmland price …
A 2008 chart: just getting started:
Just the percentage change!
I’m surprised Ben, that after posting that Iowa farmland graph, you didn’t say:
“I rest my case.”
Need I add: It brings back memories from another place and time.
We were assured on the previous thread that because there are no interest only loans involved nothing can go wrong.
Does she work for the gobmint?
Ben: I spoke with a friend of mine who bought 100 acres of Iowa farmland quite a while ago at $2,500 per acre. About 1.5-2 years ago he was offered $12,500 per acre. Last time value came up he was told he wouldn’t get $10,000 for it now.
lol@$2500/acre
These charts are all a few years prior to the peak.
I know a little bit about ag, mostly dairy but not nearly enough to ever want to make a go of it and this I know…. You’re going to go broke very quickly if you’re paying even $2500/acre. Another grim fact is mortgages were reserved exclusively for acquiring or expanding farm operations. The notion of a mortgage on a house was unheard of.
I know some brothers who own Iowa farmland. I last talked with them in 2010. They leased out some and had forests for timber on the remainder. They were always touting that it’s their “Tree Bills” and goes up 15% per year.
If you default to the creditor extending debt from a printing press or fractional reserves is that a bad thing?
Aren’t they really trying to screw you by gettting something for nothing?
“Farmland Owners In Denial About Falling Prices”
http://deltafarmpress.com/rice/farmland-owners-denial-about-falling-prices
“As 2016 dawns, I am observing the sort of “denial” of falling prices by owners of farmland that was obvious in 2008-10 in owners of residential real estate. In the residential crash of 2008-10, homeowners were “comforted” by real estate agents who were willing to list their properties at pre-crash prices. As the properties sat on the market for months that often turned into years, the previously effervescent realtors were of cold comfort to increasingly desperate sellers.”
First, millions of uninformed housing speculators, next thousands of land speculators, now many millions more housing speculators.
Speculators- Uninformed gamblers with no cash and big credit lines paying gargantuan premiums for depreciating houses and worthless dirt.
“Commercial Real Estate Crashing”
http://zerohedge.com/news/2016-08-06/gpp-property-sales-indicate-commercial-real-estate-values-are-crashing-next-shoe-dro
SUBMIT
You haven’t a choice.
Mortgage fraud continues to rage.
“Led by Miami, Mortgage Fraud in Florida Well Above National Level”
http://247wallst.com/housing/2016/07/22/led-by-miami-mortgage-fraud-in-florida-well-above-national-level/
“Roseville, CA Woman Convicted In Mortgage Fraud Scheme”
http://www.sacbee.com/news/local/crime/article93415917.html
“Home Capital Drops Most Since Facing Mortgage-Fraud Pain in 2015″
http://www.bloomberg.com/news/articles/2016-07-28/home-capital-drops-most-since-facing-mortgage-fraud-pain-in-2015
Buying on time is the only way u can make it anymore.
Do you know the number 1 cause of negative wealth in this country?
You guessed it…Loanownership!
Pretty gnarly, reminiscent of Joe Theismann or Tim Krumrie.
French gymnast suffers horrific broken leg at Olympics (Warning …
http://www.mysanantonio.com/olympics/article/French-gymnast-suffers-horrific-broken-leg-at-9126732.php - 447k - Cached - Similar pages
19 hours ago
By taking on debt for a house you are helping your fellow man realize his/her equity! Its all on paper till escrow closes. CLOSE!
Is the GOP fixing to throw Trump under the bus before he fully succeeds in his self-appointed mission to destroy the party that gave him the nomination?
Destroy the party? LOL
If anyone destroyed the pubies, it’s neocons, Bush Jr and corrupt GOP congress.
Oh I forgot…some people call that a party as long as the status quo keeps going.
TRUMP=SOUND MONEY
He’s a skull dweller.
Only on some people…Those with vast empty space.
“Those with vast empty space.”
Into the Great Wide Open ~ Tom Petty and the … - YouTube
https://www.youtube.com/watch?v=aR7GBXneiK8 - 182k -
If anyone destroyed the pubies, it’s neocons, Bush Jr and corrupt GOP congress.
+1. Neocon billionaires like Sheldon Adelman have fully captured the Establishment GOP.
Isn’t Sheldon buddy with Trump?
i still think that treating a college degree as a asset will be the way out of the student loan mess. Just like trump had to give up his 10% ownership when ichan bought the casino in bankruptcy, you give up your degree to cancel the loan
it means employers can demand a valid college degree before they can hire you or require you to have it to stay hired… ..and that would be a pretty severe penalty if all the jobs you ever wanted to do require that piece of paper to even apply.
Occupational licensing has hurt employment bad enough as is, (tons of jobs don’t actually necessitate higher education), and this would only make things worse.
BANK ERROR IN YOUR FAVOR = EQUITY WINDFALL
Luxury home prices still going up. Hardly surprising, since only the 1% are benefiting from hope n’ change.
http://www.businessinsider.com/luxury-home-prices-are-finding-their-footing-2016-8
rich people are important
Exemplars in thought and deed for the entire human race.
Sunday funnies from TBP. Enjoy!
http://www.theburningplatform.com/2016/08/07/sunday-funnies-124/
I hope there is something about a cargo plane filled with pallets of cash.
While Hillary’s leg-humpers in the MSM will always ignore or explain away her corruption and criminality, the cartoonists aren’t so accommodating.
The funnies never disappoint.
Thanks
A preview of coming attractions once the collectivist kleptocrats of the DNC establish their permanent Democrat supermajority and ensure law enforcement and the judiciary are thoroughy corrupted and co-opted. Forward!
http://www.borderlandbeat.com/2016/08/veracruz-top-cop-resigns-after-texas.html
I am trying to find where the SPLC turned blue collar white men into non-college-educated white Americans or white men without college degrees.
Bill Clinton: Whites without college degrees ‘need to be brought along to the future’
By Douglas Ernst - The Washington Times - Thursday, June 2, 2016
The former president then turned his attention to non-college-educated white Americans. Exit polling in early April showed roughly half of Republican primary voters with high school diplomas or less support the real estate mogul.
“We all need to recognize that white, non-college-educated Americans have seen great drops in their income, have seen great increases in their unemployment rate, have seen drops in their life expectancy, and they need to be brought along to the future. But they can’t live under the illusion that you can reclaim a past which is just that — past. This country is always about the future,” Mr. Clintonsaid.
http://www.washingtontimes.com/news/2016/jun/2/bill-clinton-white-non-college-educated-americans-/ - 162k -
On the assembly line workers could fart shamelessly, and they didn’t need to brush their teeth or clip their nails.
It has everything to do with the fact that this demographic is Trump’s biggest supporter.
Maybe German taxpayers need their own BREXIT.
http://www.express.co.uk/news/world/697340/European-Union-Mediterranean-anti-austerity-alliance-Germany-Angela-Merkel-Brexit
One of the best days of my life is when I signed the loan docs.
The Comrades of Proven Worth are too valuable to ever have to face legal consequences for their actions.
http://www.zerohedge.com/news/2016-08-06/pwc-takes-fall-corzine-unscathed-mf-global-fallout
Here are two charts that show how successful, government solutions are for the citizens of this country. First off, even according to the manipulated and under-reported CPI figures, you have lost 65% of your purchasing power since 1978. Using a real measure of inflation, its closer to 85%, but why quibble. You are slowly but surely being impoverished by the Federal Reserve (aka Wall Street bankers) and the corrupt politicians you elected to represent your interests.
http://www.theburningplatform.com/2016/08/05/government-is-the-problem/
This clip looks like a cross between Hillary Clinton’s Ambassador security and Barrack Obama hostage exchange.
No Country for Old Men | ‘The Discovery’ (HD) - Josh Brolin …
https://www.youtube.com/watch?v=NXDYCPI75Bo - 271k -
Ha ha!
“The deterioration of every government begins with the decay of the principles upon which it was founded.” — French political philosopher C.L. De Montesquieu
If they ever wanted to hook this woman up to a polygraph machine they would have to clear 3 city blocks.
Clinton: I ’short-circuited’ in describing FBI findings
By Harper Neidig
August 05, 2016, 01:15 pm
Hillary Clinton on Friday said that she may have mischaracterized FBI Director James Comey’s statements about her truthfulness during the investigation into her use of a private email server.
Clinton was asked at the National Association of Black Journalists-National Association of Hispanic Journalists Convention if she misrepresented Comey’s conclusions in two recent interviews she gave.
“I may have short-circuited it, and for that I will try to clarify,” she responded.
Cooking the books on ISIS intelligence
By Post Editorial Board
September 10, 2015 | 7:34pm
An open revolt is under way within the US intelligence establishment, with more than 50 veteran analysts charging their reports on ISIS were systematically changed to reflect the White House line.
Word broke two weeks ago that the Pentagon inspector general is investigating allegations of intelligence manipulation.
But a new report Wednesday detailed the startling extent of the wholesale editing — all of it aimed at bolstering the Obama administration’s claims it’s winning the battle against extremism.
One defense official told the Daily Beast this deception is a “cancer within the senior level of the intelligence command.”
The blatant politicization was based in the US Central Command and reportedly involved outright changing of reports. A written complaint to the IG described the atmosphere as “Stalinist.”
Some analysts said they saw negative reports ignored or discarded; others felt the need to self-censor for fear of losing their jobs. Yet others simply left — after being “urged” to retire when they complained.
All of this served to cover the president’s back when he and other top officials publicly crowed that ISIS is losing.
Ah, the irony: Democrats accused George W. Bush & Co. of cherry-picking and falsifying intelligence to support the invasion of Iraq. In fact, that intelligence matched what every other major power believed about Iraq’s weapons programs.
Yet the outrage went on for years, with a few in Congress actually calling to impeach President Bush. Will any of those critics speak up about what the Obama team stands accused of doing?
The nation can hope US intelligence has improved since 2003. Too bad the politicization of intelligence has grown far worse.