Actually, that’s a land rush: Oklahoma, 1889

There has been a lot of news about the strong agricultural sales in California or around the world for that matter. The ag land has been holding its value and has been more stable then any other market. It makes sense too. Land is a finite commodity. It's something you can touch, feel, see, visit. And investors know its a safe bet that as long as there are more people in the world there is a need for more food as well as fuel.



Which is why in California, investors from other countries collectively boosted their holdings 2.5% from February 2007 to February 2009 to 1.08 million acres - about 5% of the state's total farmland. For example, Optima Fund Management, a New York fund, plans to acquire about 10,000 acres of Arizona farmland and California vineyards by year's end.

Why are they not investing in their own countries? Well I really dont know enough to say but my guess is cheaper land in other countries like Brazil and Africa, where profits can be maximized. But the stability of the government is very important to big investment funds as well.

New home builders are also buying land since April of this year in California and Arizonia we have seen a huge increase. David Smith From AHI blog predicts this is a indecator of the bottom of the market:  

Foreclosures are an ultimate lagging indicator, and any damn fool can predict the past.  When it comes to drops, my leading indicator is lawyers deciding to invest, and when it comes to rises, a very good leading indicator is the price of development land, as revealed in this Wall Street Journal article.

Why land is the leading indicator is easy to deduce: property takes time to develop, and land value is a residual; land is worth the net after cost, risk allowance, and profit.  Further, because land produces no yield and has minimal holding costs, nearly all of its value is represented by the future residual expectation, making the price of development land volatile – hence a sensitive indicator that responds to marketplace flickers.


Investors seeing farmland as safer bet than stocks By P.J. Huffstutter, Los Angeles Times

In California, investors from countries including Spain, Switzerland, China, Egypt and Iran collectively boosted their holdings 2.5% from February 2007 to February 2009 to 1.08 million acres — about 5% of the state's total farmland.

Investors also understand that land is a finite commodity. The amount of arable land worldwide is dwindling, while the world’s population is forecast to jump to more than 9 billion by 2050 from 6.9 billion today. That has water-strapped countries eager to establish secure food supplies and bolster biofuel production. Fast-growing economies such as China are stepping up food imports to feed a burgeoning middle class.
"Could we see the '80s all over again? Absolutely," said agricultural economist Michael Swanson, of Wells Fargo's Agricultural Industries Group. "The combination of high crop prices and ultra-low interest rates has farmers bidding historically high prices. It will end very badly for some of them."

The market appears strong for Almond orchards. Check out what the Ag agents for Century 21 M&M are saying:
Agricultural Real Estate Sales Growing Stronger.

The price of open land often is determined by the availability of irrigation water.  Titus said property in a water district is typically valued from $12,000 to $15,000.  Property with a history of having good source of well water is priced from $3,500 to $6,500.

Looking into the local market:
In rural Tracy, there are 12 available lots listed under agricultural. The price range is 119K-6.6m. The average days on the market is 189. The Smallest lot available is a 4 acre lot on Larch road. The Largest is 1040 acres of farm land on Kasson rd. Its hard to tell the market in Tracy. In the last year there have been only 2 sales. One acre on lammers for 39K(seems like a good deal) and 147 acres for $1,661,000.

Click on this link to see all 12 properties.
(the link will only be active for 30 days from this post)
So now might be the time to start considering selling the family farm property and wait for the wall street investor to come in and throw down the big money. Seems they are in the game now.

"I don't think so" ?