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USA | 1) In late 70s early 80s in this part of the country land would not gross the interest cost per acre at the peak.. Today that is not the case, ground will come closer to cash flowing the selling price.. If land selling price today was on par with what it was like in late 70s- eary 80 time frame, land price would be pushing $20,000 per acre.
2) Lenders in the 70- 80 time frame, didn't pay much attention to cash flow. Farm land was going up in vallue, cash flow didn't matter much. Like the current housing bubble, would have thought those lending money on houses would have learned from the farmland bubble. Lenders I know today, if you can't cash flow it, they ain't lending the money, kmow matter how much equity there is.
3) If revenue crop insurance had been available like we have today, 80s would have been alot more manageable.
4) Those buying ground today, compared to the 70-80 peak timeframe have a lot stronger foundation under them.
5) It is just plain easier to pay for ground at current values compared to those 30 years ago.
Edited by coup 10/27/2010 20:29
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Inflated Balance Sheets
