A 360 Degree Overview of Land as an Investment in the US
For the past two decades, there have been few investments that have turned out to be as profitable and rewarding as land in the United States. And it only makes sense.
While the supply would always be limited at 2.3 billion acres, the demand for land keeps rising due to various factors.
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Factors Leading to an Increased Demand
There are many factors that contribute to a strong demand for land in the US. Some of them include strong consumer confidence, many diverse uses of land, demographics, economic and export conditions, government policies, and one of the most important ones, historically low interest rates.
This is what has led the consumer confidence to go from just 37.4 in 2012 to a staggering 127.4 in 2018, according to NBC News.
While the farmland values have been performing poorly, they haven’t been able to impact the overall demand for land much in the US.
Why the Optimism?
It goes without saying that there’s a lot of optimism in the US land market currently. There are many reasons for it.
Some of the more important ones include strong corporate earnings that have also led to an increase in wages, surprisingly low interest rates, steadily increasing retail spending and more.
There are also many other supporting factors like reduced unemployment and a bullish stock market.
Where Would Land Prices Go from Here?
If the current factors are anything to go by, the optimism may very well continue for a long time to come.
The inventory of homes on the market has been decreasing, and the historically low interest rates are further fueling the demand for them.
The construction is increasing as well, and lumber prices too have been putting on a strong show.
Coming to the Farmland Values
As mentioned above, farmland values have been decreasing. One of the biggest reasons for it is the global commodity prices going down, which directly affect farmland values.
But that doesn’t mean you should rule them out as an investment option. After all, agriculture has always been one of the biggest contributors to the US economy, accounting for a massive $985 billion of it.
Similarly, it also employs more than most other industries in the country at over 23 million jobs.
More Positive Signs
In fact, even the recent trends for farmland values have not been as bad. The farm real estate values showed a slight increase in 2017 over their 2016 levels, while the cropland values remain unchanged.
But lower energy costs and strong growth projections for the coming years mean they may start an upward trend anytime in the near future.
Summing It Up
There’s little doubt that there are many opportunities as far as investing in land in the US is concerned. The homes on sale are decreasing but the demand for is steadily increasing.
Further, this demand is backed by some strong factors that don’t seem to be going anywhere anytime soon.