US has been one of the most rewarding investments in the US, despite not coming with major risks like other types of investments such as the stock markets.
However, while the short term prospects might keep changing due to the economic conditions, the long term picture for land as an investment in the country seems pretty promising.
This is especially true with the supply of land being fixed at 2.3 billion acres, while the demand continues to grow.
Factors Shaping the Optimism
Of course, the consistently bullish land market is backed by some strong factors. These include a strong consumer confidence, resources, easy financing availability, favorable export conditions, healthy economic conditions and more.
While there are opposing factors as well, the only major one is falling farmland values. This does affect the consumer confidence in a negative way, but not enough to outweigh all the other positive factors.
This does reflect in the fact that the consumer confidence has been steadily increasing from the past few years, going from just around 40 to around the 130 mark recently, as reported by NBC News.
Other Reasons for the Optimism
There have obviously been a wide range of factors boosting the demand for land in the country. Apart from the ones we discussed above, some of the other factors that are more specific to the land market, include better corporate earnings and, as a result, increased wages; low interest rates, increasing stock markets, decreasing unemployment and more.
These are all factors that are contributing to the continued increase in demand for land in the US.
Future Land Value Trends
Some of the primary factors still point to a continued increase in the price of land in the country. These particularly include the historically low interest rates (that make it much easier to buy a home), and a steadily decreasing inventory of homes on the market thanks to the increased demand and fixed supply.
But What about the Farmland Values?
Well, they haven’t been doing as bad as they used to either. In fact, recently, both farm real estate values and pasture land values showed a slight increase, while the cropland values simply stopped declining and remained unchanged from their previous levels.
The fall in farmland values was caused due to falling commodity prices, but they haven’t been falling much either right now, sparking the hopes of a rebound.
Some Important Considerations
Here are some important considerations for the commercial land market in the US:
- The supply of land is limited, while the demand for different types of land continues to grow
- An increase in consumer income, which further fuels the demand for homes
- Increase in investment land
Now, some important considerations for agriculture land in the country:
- Commodity prices showing signs of a rebound
- More supply than demand in the global grain markets
- A strong dollar, which translates to a more challenging global trading environment
- A much higher level of safety as an investment, even when the economic conditions keep fluctuating