An Interview with Tom Brickman, September 29, 2009
Q: What are you seeing in the rural land markets right now?
A: We are moving some properties but it is slower than normal. The ones we’re selling are modestly priced – at the low end of what we called ‘reasonable’ last year. It’s definitely a different market than 8 to 12 months ago.
Q: Why do you think it’s slower?
A: From my perspective, the main factor affecting the rural land business is uncertainty from many points of view – interest rates, taxes, employment, expanding role of federal government. Buyers and sellers are both ‘sitting on their hands’ waiting for someone to ‘blink’. Sellers looking backwards at the tremendous run-up in prices over the past 8 years and unwilling to budge off those peaks . . . buyers looking forward at pervasive uncertainty and unwilling to pretend things haven’t changed. So transaction levels are declining – the ‘gears are locked up’.
Q: What will cause the ‘gears to unlock’?
A: Historically it is sellers that ‘blink’ because they are more subject to ‘external’ pressures than are buyers . . . education, health care needs, housing cost, decline in standard of living, etc. Unlike sellers, buyers are seldom ‘forced’ into a decision. The longer this perception of uncertainty continues, the more likely it is the vagaries of life will catch up with sellers. More and more Sellers will be pressed into making a sell decision and prices will decline.
Q: So, you see the possibility of a price decline. How much?
A: Well, I think we’re already seeing declines. The only other time in my 34 year career I’ve seen land decline was just after the Carter years . . . the early 1980’s. We saw land prices fall then, but, not too far, perhaps 15-20%, and not for too long – a couple of years. If the uncertainty continues I expect to see something modest like this again. But, as a land owner and land broker, I am optimistic! Land is such a great, safe place to put money long-term – it really resist downward movement. Buyers know this and my bet is they will re-enter the market to do their part to ‘unlock the gears’. It’s getting to be a good time to be a buyer.