It’s rocky times for the economy. Inflation is hitting every industry. On June 10, 2022, it approached 9%, with numbers not seen for 30-40 years. Over the past couple of years, we saw runaway housing market inflation. But you can ride the choppy waters.
Read on to find out how inflation will impact ranch sales in 2022. We’ll talk of inflation but remember: Land has and always will be a great hedge against inflation. Land continues to go up in value.
What is Inflation?
In modern times, prices rise when money gets artificially pump into the economy. Quantitative easing (QA)–printing paper money without gold to back it up—presents illusions. Real property could be the investor’s gold; it is real. The expansion of the nation’s money supply has been driving down the value of $100 bill now for decades.
Congress has not been balancing the budget. They throw borrowed money at most every problem. The daily interest is almost impossible to pay. So, inflation continues to cause anxiety and land can help alleviate it. Consumer sentiment fell to a record low of 50.2, a level out of the 1980s. Treasury Secretary Yellen says it will not recede anytime soon. Unfortunately, Americans expect the conditions to get worse. Again, land investments hedge against these portents.
There’s more to it. Numbers get fudged. Here are a couple of examples. The official Consumer Price Index (CPI) records the overall price increase reached 8.3% year-over-year. But several economists cite the manipulation of equations – another decades-long problem. ShadowStats tracks the actual numbers as defined decades ago. They found today’s annualized inflationary rates to be 16.46%, the highest rate in 75 years.
On June 11, 2022, Michael Robison explains in Gateway Pundit. “Washington as a whole…has been consistently changing how inflation is tracked and reported because it appears the economy is better than it truly happens to be.”
The second example of distorted financial reports has to do with theory. The Bureau of Labor and Statistics created the Consumer Price Index as a gauge to measure the standard of living. Robison reports changes to the original measurement for a “basket of goods” in 1980. They began utilizing a “theory” concept, which puts out unrealistic numbers.
So, come apart. No matter the theories, you can find creative ways to improve a land investment. Grow food, raise animals, fish, and hunt, build a lodge with trees found on the hillside.
Inflation in Major Industries
As inflation reduces buying power, ranches present ways to offset it. Up 48.7 percent, gas prices will impact everything. Machines need fuel, tools need power. Fertilizer prices also increased significantly, and both pushed fruit prices up 7.8 percent and vegetables more. Basic protein sources–meat and poultry, milk and eggs–cost more to produce, too. Pastures require water and fertilizer for the best grazing land as well as wildlife management and hunting.
Inflation complicates the entire food chain. To prepare the harvest for market, packaging and manufacturing plants need substantial amounts of energy. Transportation costs increase with double diesel prices. As farmers and ranchers deal with the costs, they pass along the increases in their sales prices.
Wages and Building Material Expenses
Increasing labor and building material prices effect the farming and ranching investments to an extent. To counter the higher prices, higher wages could be on tap, adding costs for ranches that hire. Then there are the prohibitive costs for building materials. This contributed to the housing market inflation. We’ll see if prices for building materials come down.
Low interest rates kept the housing market rolling for over a decade. The rising interest rates may downshift that trend. Values of luxury homes for sale now on ranches, however, may escape the drama of city investments.
Real Property as Safe Haven
Inflation is just one factor connected to the overall economy. Prolonged, suppressed interest rates, free money and services, removal of the gold standard, and now the Fed is printing money to pay its own bills. Sounds unstable and exactly why investors look for nice, big ranches for sale in 2022.
As far as land investments go, well-heeled investors will be less affected by inflation. The lower and middle class Americans will take the brunt. Unfortunately, wages are not keeping up with higher prices. Middle class ranchers and buyers of working ranches will notice the compounding effects.
Investors Market: Large Ranches for Sale
The market differs with large ranches. We are already through half of 2022 and investor interest is high. Other kinds of buyers could jump on the land investment trend. All properties need attention and cash input. Even dormant land as an investment needs maintenance.
You can see how important it will be for ranchers and investment buyers to run detailed numbers before investing in farms and working ranches for sale.
Is Land a Good Investment in 2022?
Land is a good investment. Rising inflation, coupled with rising interest rates, is increasing sales of large acreage. Investors are looking warily at the stock and bond markets, even cryptocurrency. They want real property. A portion of today’s investors have never searched for ranches for sale in faraway places like Montana or Wyoming. Nevertheless, our economy has entered uncharted territory. Large ranches and farms look good right now.
However, the combination of many elements will affect ranch sales for 2022. The buyer’s financial strength, land values, and the variables contributing to ranch property values all come into play.
Buyer’s Financial Strength
How inflation will impact ranch sales depends on crisscrossing factors. Inflation may reduce one person’s buying power but help another’s. As much as it impacts the portfolio of the buyer and his/her investments, inflation may reduce buying power. More importantly, if the buyer will be financing, rising interest rates can affect the decisions.
The lucky buyer who pays cash can take advantage of the lower prices brought on by higher interest rates. Buying luxury ranches for sale with stunning estate homes, some investors dodge issues by paying cash or using a 1031. We see big recreational properties as wonderful solutions for building estate homes.
Will large plots of land as an investment also be affected? That’s a mixed bag. While finding buyers for large working ranches for sale can be challenging, smaller luxury ranches for sale may still gain in value. Unfortunately, inflation pushes more older farmers and tired ranchers to sell. These operations may become land investments and more available ranches for sale from New Mexico to Colorado and Utah.
Potlatch surveyed real estate brokers who expressed optimism for total 2022 ranch sales. Those farmers and ranchers involved in the food markets run 18 months ahead of the real time market. Currently, farm acreage forecasts speak of exports, effects of drought, livestock expansion, and interest rates. On a positive note, remember, real property is a finite resource. It can be your safety net if other investments falter.
Variables Influencing Land Values
To determine impacts on 2022 ranch sales, we need to interview interested parties. We weigh many variables when guiding you to a specific piece of land. For example, these 10 key factors vary for every one of the Western ranches for sale today:
- Natural Resources: water, habitat
- Income production: hunting, fishing, cattle operations, mining, guest ranch
- Owner operation or paid management
- Condition of improvements
- Needed improvement
What Land Investment Interests You?
Every large parcel is different. Find an expert who knows the region you are interested in as well as the industry you would join. Do you want a ranch for hunting and fishing, recreation, horseback riding? Do you want to own a farming or ranching operation? Or are you looking for land as an investment, land that could be leased or under an easement? It’s a good year for sale of recreational properties and rural land.
Is land a good investment? To answer the question for yourself, you’ve got to sit down with an experienced, reputable ranch broker. Examine every facet. Crunch the numbers. Search out possibilities.
For some of you, owning a gorgeous ranch in the Rocky Mountains will be invaluable. Just “give me a home where the buffalo roam, where the deer and the antelope play.” (“John Denver – Home on The Range Lyrics | Genius Lyrics”)
Brokers – Land as an Investment
To learn about recreational or other farms or ranches for sale in the Western USA, call Harrigan Land Company at 303-908-1101. Serving Colorado, New Mexico, Wyoming, Utah, Montana, and the surrounding areas.