March Pulse: Overall Economy Dictates Rural Land Activity

The March LANDTHINK Pulse revealed 35.11% of respondents think the overall economy has the largest impact on the overall health of the rural land market. The majority of those responding feel that no crystal ball is needed; the overall state of the economy is a great predictor of what the future has in store for the rural land market. With the nation’s economy growing at a slow but steady pace since the economic downturn, the current real estate land market has corrected, and economic indicators have it continuing to move in the right direction.

The basic indicator of economic health is Gross Domestic Product (GDP), which is the total finished goods and services produced in the nation in a specific time period. Growth in GDP has been slower than expected, which analysts say is atypical post-recession, but the good news is that home and land prices continue to accelerate.

Real estate has always played an integral role in the economy. The housing market and the rural land market are largely affected by unemployment rates, interest rates, consumer confidence, and income. With job opportunities and rising incomes, comes greater demand for land. Land becomes attractive to buyers who are in a position to purchase and take out a loan, feeling confident in the forecast of the overall economy and projected outlook for the real estate market.

Many in our LANDTHINK audience (19.86%) thought that commodity prices had the largest impact on the rural land market. Without a doubt, commodity prices greatly influence the demand for agricultural land. When commodity prices decline, so does net farm income, which subsequently leads to softening farmland values. Since existing farmers are the primary buyers of additional farmland, low commodity prices trigger cautious spending on additional land and equipment purchases.

Last month, the March Pulse asked: In your opinion, which factor has the largest impact on the overall health of the rural land market?

The LANDTHINK audience certainly expressed mixed views on factors that impact the land market, as our informal online survey revealed. The results were all over the board, but the largest percentage (35.11%) indicated that the overall economy has the largest impact on the overall health of the rural land market, followed by 19.86% of our audience, who indicated that commodity prices had the greatest affect on the land market.

Here’s how the results panned out:

• 2.13% said Stock Market
• 19.86% said Commodity Prices
• 35.11% said Overall Economy
• 12.06% said Population Growth
• 7.80% said Government Policies
• 9.57% said Financing Availability
• 2.84% said Employment Growth
• 0.35% said Inflation Concerns
• 2.48% said Weather
• 7.80% said Other

Thank you to everyone who participated and shared the Pulse with friends and connections in the land industry.

LANDTHINK is seeking sponsors for the May LANDTHINK Pulse Question and months thereafter. Sponsorship of the Pulse during the busiest time of the year is a great way to ensure your brokerage is the first one buyers and sellers call when they have a need to buy or sell property. Leveraging our entire network of web and social media sites is a great way get your name out there during the buying season. Pulse sponsorships are offered on a first come first served basis and are subject to certain limitations. If your business would be interested in sponsoring next month’s May Pulse question, please contact us soon.

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Click here to answer the April Pulse question: Would you prefer to own a large tract of land with a partner or a small tract without a partner?