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Western Iowa | The thing is, from what I can tell, people are not paying cash for the land, at least not here. I talked to several loan officers at diffrent banks, and several 'higher ups" at the largest ag bank in iowa, and was told that most of the customers buying land are not putting ANY cash down, they are just using equity in other ground and in there operation to 'absorb' the new debt. The cash in the operation is going to dilute the higher rents by keeping some cash in the operation to keep the total per acre borrowing down (limits exposure to the bank) and using the rest of the cash to buy new or better equipment to avoid uncle sam getting too big a chunk at the end of the year.
I also saw an article a couple months ago talking about some federal reserve bank in Kansas City and the total average of ag borrowers has 70% debt to equity on farmground. That number has climbed over the last few years. Maybe there is some misleading information there, but 70% debt on ground??????
Guys that think things are just going up and that there is no bubble here like the 70's are not thinking correctly
Is it going to be a train wreck? I don't think so, not yet anyway, but there is some hot air under this thing, and we can easily see a 35% correction in land values over a 12-24 month period. I just am not sure when that peroid will be...... | |
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land hits Carroll County Iowa all time high maybe?
