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land bubble set to pop

Land Price Bubble Popping?

From Texas to North Dakota, land is selling for thousands of dollars an acre across the United States.

In fact, even many experts haven’t seen prices this high.

Ag Reporter Sarah Gustin has more on if this land price bubble is about to burst.

(Vince Bitz / Bitz Realty) “They are record highs right now.”

Vince Bitz has been selling land since the 70s.

He says he’s never seen land at these prices.

(Vince Bitz / Bitz Realty) “Going back 6,7,8,9, years ago I would have never believed that land prices would have went up this high.”

He says Bitz Realty recently sold some cropland for more than 3-thousand dollars an acre.

And an acre of pasture is bringing a thousand dollars or more.

(Vince Bitz / Bitz Realty) “When you look from a producers side I don’t think it can go much higher. I think it probably has topped out. But, the investor who has a lot of money in his pocket, says ya know, I am going to diversify and own some land because it will always be there.”

Bitz says an unstable stock market and economy has some outside investors pushing prices.

(Vince Bitz / Bitz Realty)”They

don’t have to have a huge return on their money. Just ownership, just ownership. When you look at real estate values in north dakota compared to what they are even in South Dakota, when you look at them from that perspective we are under priced.”

As for the land market in other states Jim Farrell with Farmers National Company says prices are strong.

He says the epi-center of land sales started in Iowa back in 2006.

(Jim Farrell / Farmers National Co.) “We sold about 839 farms and ranches last year. About 720 million dollars worth of property and just over 80% of that went to farmers.”

What’s in store for the future?

(Jim Farrell / Farmers National Co.) “Actually I am kinda expecting land prices to hold steady from this point forward. If we see a 4 or 5% increase in 2014 that might be a pretty good year. Right now grain prices have backed off from those historical highs and grain prices have had influence on the prices of course. Some of the other factors that have driven prices up, like the 0% interest rate at the Fed, ethanol, the use of corn ethanol, plus demand from China and other developing nations. I think we will continue to see a strong market, but I don’t think we are going to see the double digit gains that we’ve been seeing the last 5 years.”

Last year National Farmers Company sold cropland in the Red River Valley for 10-thousand dollars an acre.

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