Evaluating the Opportunities in the US Land Market
Land has been one of the safest yet one of the most rewarding investments in the US. Of course, there may be bullish and bearish phases in the land market as well, just like all the other types of markets and investments, but with the supply of land in the country being fixed at 3.7 million squares, it’s hard to argue about the long-term prospects of land as an investment.
Understanding the Demand
The demand for land in the country is currently backed by a variety of factors, which is a very positive sign for long-term optimism. Some of these factors include consumer confidence, resources, economic conditions, export conditions, financing availability and more.
However, the opposing factors can also weight down the consumer confidence in the land market, with the sluggish farmland values being the biggest and only major opposing factor.
That being said, this hasn’t stopped the consumer confidence from going from just 37.4 in 2012 to an impressively high level of about 130 in 2018. This was revealed by the report released by NBC News.
Reasons for the Strong Consumer Confidence
We have already mentioned some of the major reasons for the strong consumer confidence above when discussing the different factors of demand. However, there are also other significant reasons as well, including low interest rates, better corporate earnings, increasing wages, lower unemployment levels, a bullish stock market and more.
These have all created an environment where the demand for land has been consistently increasing.
Analyzing Future Trends
Based on everything we discussed above, there’s not much doubt that the overall environment is still pretty optimistic for future trends in the land market.
Further, with interest rates being historically low (and showing no signs of increasing much any time soon), coupled with the decreasing inventory of homes on the market, it can be said with a fair bit of certainty that the future trends are positive as well.
The Elephant in the Room
Despite all the positive factors and indicators, the farmland values haven’t been showing much optimism. This is primarily due to falling commodity prices in the global markets.
That said, agriculture is one of the biggest industries in the US, and also accounts for the most jobs in the country.
This means that while the short term trends might fluctuate, but the long term trends may not turn very negative, especially with all the other factors being very positive.
A Final Word
The information we have analyzed in this short post leads us to believe that as far as the consumer confidence side of things is concerned, there are many opportunities.
There’s a consistent increase in commercial construction and also consumer income – and with a variety of positive factors – the opportunities seem to be fairly rewarding even at these levels.
Now, while things might not seem as promising on the farmland side of things, they are getting better. The commodity prices seem to be stabilizing, which might prepare them for a rebound in the near future.
This may make the farmland values share a similar level of optimism as commercial land in the future.