Originally, only landowners could vote in the United States of America. Real estate can catapult you to a higher level of wealth. Buying Land 101 Tips & Techniques can help you build wealth.
Land Has Fixed Supply:
America has had a land boom for at least the last 20 years. The land is a factor of productivity and there are only 2.3 billion acres available in the United States. This limited supply is one of the reasons why real estate prices continue to soar.
Surplus Money Increases Demand:
Fortunately, Americans have been able to increase their wealth over the last 20 years. This increased wealth, higher consumer confidence, financing availability and demographics have increased demand. People feel more affluent and want to demonstrate their confidence by adding real estate to their wealth portfolio.
Economics 101: Rising Land Prices:
Due to the inelastic supply (fixed) and elastic demand (variable), the land prices have been rising. This is a basic feature of Economics 101. Banks have made loans readily available to those who want to invest in land. This has increased the land price even more.
Farmland Price Sluggishness:
The aforementioned rise in prices has been mostly in the retail and commercial land sectors. Unfortunately, agricultural land has not seen the same increase. Technology has made it easier for smaller plots of land to produce more food. For example, the United States cropland value has remained at the same price for the last two years – $4,090 per acre. These facts have both advantages and disadvantages.
Farm Land Advantages:
Everyone needs food, so farmland will always be needed. Because cropland has not risen as fast as other lands, it has a higher threshold that is possible. Farmland is also productive. You can live on the land while raising animals and growing crops. Energy and feed inputs are also cheaper, which enables you to earn higher profits.
Farm Land Disadvantages:
Unfortunately, just as America uses technology to increase production, so are other countries. There is a reported oversupply in global grain markets and there are many global trade uncertainties. The Dow Jones Industrial Average for 2018 is struggling to remain above water. It might finish the year down. This could damage consumer confidence moving forward.
Land Buying Techniques:
It is important that prospective farmland buyers know that agricultural loans are different than home mortgages. In fact, farm owners might have more rights than homeowners. Banks have a tough time foreclosing on farms because it would lead to the loss of a homestead and agricultural productivity. Therefore, farmland loans might involve stricter qualification requirements.
Very Unique Market:
Cropland is also a very unique market. Some of the most productive lands are held by corporations or families that have been tilling the land for generations. Therefore, it might be difficult to find quality land for sale, especially plots next to one another.
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