O&N,
How much longer would you guess we'll be waiting for land prices to drop?
In your estimation, will I ever see Flint Hills cow pasture for $1k/acre or less again?[/QUOTE Well 7 or less years ago we had deficiency payments on corn, at 1.88- 2.35 per bushel. You think that is likely to return or will prices continue to rise? With water a concern in all of Kansas, the pressure on beef producers, high feed cost, I saw an auction this week where 3rd trimester cows sold for $2150 a head! As I said, I belief a correction is likely within 10 years, it will seem as real and continuous like some people think it is now! Do I think it will be $200 an acre, I doubt it, pasture ground I can see $500-$1000. realistically, really 500-1000 is like 200 dollars in the late '70's, and it would not be a push to get a certified appraisal at that price today. The big insurance lenders use $1000.00 per cow/calf unit to establish land value, they lend 60%-65% per cent of that! With the pressure on the cattle market, it does not take very long to whittle down your borrowing power. And yes I realize there a scad of local banks that will do better, if they survived the last one. A lot of land, is purchased by a neighbor, who has equity in a quantity of land, wants this ground to even up the section, has money available from having ground appraise for more than he thought in a million years, so he's playing with funny money, assumes that value will stay the same, assumes that crop prices will stay the same or increase.... you know what they say about assumptions. The smart lenders assume that the ground has no value except what it produces, in a normal averaged year. Some of this enthusiasm is "bred In", with the subsidized crop insurance program. As we know pasture acres are discounted below the row crop acres, and will be discounted faster than the row crop ground. You might be surprised, if it happens like it did in the 1970's, it will be fast. Banks cut back, as soon as there is trouble on the horizon, call loans, refuse to lend, no buyers, cheaper land, presto! Local bankers are the scare-de-cat investors, in to big, and want to get out quickly. A lot of this could be overcome if they had long term vision. But they don't.
