Pulse: Land Prices Expected to Keep Climbing in 2022

According to the LANDTHINK Pulse results, most people think land prices will continue to climb throughout the year. Last month’s survey question revealed that 47.1% of our audience expected to see a slight increase in land prices in 2022. Land prices rose nearly everywhere in the country in 2021. The white hot land market we’ve seen nationwide during the pandemic was spurred by a combination of low mortgage rates, remote work allowing buyers to do their job just about anywhere, and a wave of first time land buyers into the market. Long before the pandemic, there wasn’t enough land available to meet the rapidly growing demand. Cue record price growth.

Last month, the December Pulse asked: What do you think will happen to land prices in 2022?

December Pulse Sponsored by

Land prices were rising strongly before the pandemic, but since the pandemic hit they’ve been on a tear. Whether you benefited from the surge depended a lot on if you were selling land or buying land. The health crisis, social unrest, and the deepening political polarization of our country is steering landbuying trends that many are predicting to continue throughout 2022.

So, you’re thinking pretty hard about buying or selling land sometime soon and want to know how the housing market is going to look? Well, no one can predict what’s going to happen with 100% accuracy, but we can make some guesses. The land market may not reach the heights of 2021, but the strong seller’s market is expected to persist, and the Southeast will likely maintain its top spot as the most in-demand region. There are specific reasons why land prices are expected to keep rising in 2022, albeit at a slower pace.

The work-from-home trend

The work-from-home revolution has impacted commercial real estate, residential markets, and rural land markets throughout the country. It has given people a newfound freedom to choose where they want to live. Businesses have realized that they can operate fully or partially in a remote setup, and the days of employees coming into the office five days a week are over. Urban dwellers can now migrate to safer, private and expansive rural properties.

People have also started to move to places that align with their politics. Controversial issues like gun rights, abortion rights, mask mandates, and critical race theory have people seeking out areas where there are like-minded people with laws that fit their political beliefs. The combination of factors has led to a surge in buying activity in rural areas over the past year. Here we are, about fourteen months later, with the pandemic still looming over us. Most office-goers are still working remotely and it doesn’t look like that’s going to change anytime soon.

An inventory shortage will persist

Tight inventory conditions within the land market are another reason prices should keep rising in 2022. Long before the pandemic, the land market has been no stranger to low inventory- it remains one of the biggest challenges in the current market. Buyers are actively searching for and purchasing land, but there just isn’t enough land for sale to meet the growing demand. When there are more buyers searching for rural land, and fewer sellers looking to list their property, the market is tipped in the seller’s favor- commonly referred to as a “sellers market”. Inventory levels have been so low for so long, there’s a lot of pent-up demand. Land buyers will likely need to prepare to make a larger down payment and prepare to offer above the list price.

With inflation running hot, hard assets are a refuge

Typically hard assets are an excellent hedge against inflation, meaning their value rises as the general price levels for goods and services increases (known as Consumer Price Index or CPI). Other investments, especially bonds and similar fixed-income debt instruments, typically lose value as CPI increases. Investing in real estate offers advantages during inflationary periods and a diversified portfolio offers strong and stable returns. As inflation rises, so do property values, so landowners will see appreciation. With the land inventory shortage so acute, owners have already seen their assets increase more quickly than at any time in recent memory. Timberland and farmland are a very good hedge against both inflation and economic downturns. Also, they can provide a continuous cashflow from leases and timber income, not to mention the tax benefits from holding these assets.

The LANDTHINK audience certainly had a strong opinion on what 2022 has in store for the land prices. The results showed some mixed views, but the majority of our audience (47.1%) believed that land prices would Increase Slightly, followed by 21.5% who believed land prices would Increase Drastically throughout 2022. Only (14.0%) held the opinion that land prices will Decrease Slightly. Some (11.0%) disagreed, expecting land prices to Decrease Drastically, and just 6.4% thought prices would Remain Unchanged.

LANDTHINK would like to thank The Land Show with Dave and Johnny for sponsoring the December Pulse and for coming up with a very interesting question to pose to our audience. The show can be heard throughout the state of Alabama on Saturday mornings. Visit their website for a list of the locations and stations and to listen to podcasts. Dave Milton and Jonathan Goode, land agents with Southeastern Land Group, host the show and want to introduce land investing to capable investors and help land owners reach true market potential when listing their properties.

Become a Pulse sponsor! It’s 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. You’ll get insane exposure on Social + Email + Web. That’s 500,000+ monthly eyes on you! Once you have it, you won’t want to give it up! Pulse sponsorships are offered on a first come first served basis and are subject to certain limitations. If your business is interested in becoming a Pulse sponsor or you want to suggest a question for the Pulse, please contact us.