The US land market has been performing exceptionally well since the past two decades. However, experts believe it can still be a great investment option, especially with the growing demand for land while the supply being fixed at 2.3 billion acres.
How Does the Demand Grow?
There are many factors that trigger a growth in the demand for land. Some of the more important ones include economic and export conditions, uses of land, resources, consumer confidence, interest rates, financing availability and employment.
While all these factors are currently positive and working in favor of demand for land in the country, there’s one opposing factor as well, which is falling farmland values.
However, the consumer confidence has been steadily increasing despite that bit of a hurdle, and according to NBC News, it has recently hit a new high of 127.4.
What Boosts the Optimism?
The overall environment is quite optimistic for the land market in the US currently. And it’s backed by factors like better employment levels, increased corporate earnings, higher wages, increasing retail spending, historically low interest rates and more.
Would the Optimism Continue in the Future?
While no one can answer this question for sure, all the indicators look pretty positive right now. One of the most important factors – interest rates – have remained low since a while now, and it doesn’t look like they will be increasing much anytime soon.
On the other hand, the inventory of homes on sale has been decreasing, which means that the future trends look just as positive, if not better.
Are Farmland Values a Big Worry?
A few years back, maybe they were a serious worrying factor. In recent years, however, they certainly don’t seem to be much of a negative factor.
The commodity prices aren’t doing as bad as before, which has led to the farmland values in the country to stop their fall and slowly start going up again.
Of course, they still haven’t been increasing anywhere in line with the other land values – as the global commodity markets are still far from being at their best – but the recent trends certainly aren’t too worrying.
What About the Opportunities?
After discussing everything that we did above, it’s pretty clear that there still seem to be plenty of opportunities in the US land market.
Construction is still on a rise in the country, while the inventory of homes has been decreasing. This situation further indicates a positive future for the US land market when you consider the fact that the consumer discretionary income has been increasing as well.
In addition to that, the financing availability is only getting better, while the historically low interest rates make the loans cheaper.
Finally, while the agricultural land values might seem to be a concern, they may improve much faster than you can imagine, especially with the global commodity markets showing some signs of rebound and the increasing global demand for agricultural goods.