Reasons Land is an Attractive Investment Option in the US

By Akshay Sharma March 4, 2019 Infographic

Statistics reveal that there have been few investments in the US as profitable and rewarding as land. As the supply is fixed at 3.7 million square miles, it’s only natural for the demand for land to increase in the long term as more and more people decide to buy land or invest in land in the US.

Factors Boosting the Demand

Multiple factors are currently working in favor of the land market in the US. While some are kind of fixed factors like use, demographics and resources, there are many time-specific ones that are being particularly favorable for land prices, such as low interest rates, favorable government policies and economic conditions, better wages and more employment opportunities, and so on.

The opposing factor right now is falling farmland prices, which is a result of a bearish commodity market.

Consumer Confidence Reflecting Strong Optimism

The consumer confidence has been having an upward trend since 2012. According to NBC News, it has gone up from just 37.4 in January 2012 to 127.4 in 2018.

Some of the factors that have contributed to it apart from the ones we mentioned above include better corporate earnings, a bullish stock market, increase in retail spending, increasing lumber prices and more.

Predicting Future Trends

All the factors we have discussed above suggest that the current trends may continue for a fairly long period of time. The interest rates are at historically low levels currently, and the inventory of homes on the market is decreasing.

On the other hand, construction is increasing and the same goes for lumber prices.

Addressing the Elephant in the Room

The elephant in the room right now is decreasing farmland values. They have been decreasing because the global commodity markets are going through a bearish phase currently.

But we shouldn’t forget that agriculture contributes $985 billion to the US GDP, and 54% of all the land in the US is agricultural land.

Hopes for a Rebound

There are certainly hopes for farmland values increasing in the future, too. That’s because they have already started showing some positive signs, with the farm real estate and pasture values increasing by 2.3 percent and 1.5 percent in 2017, respectively, over the previous year.

Further, agricultural land is considered to be a safe haven as an investment option, and some of the commodities like corn, wheat and cotton have been holding their ground well recently.

Most importantly, it’s expected that the commodity markets will end their bearish phase soon and enter a bullish phase, which will definitely have a very positive impact on farmland values.

Opportunities for Real Estate Buyers

There seem to be attractive opportunities for people looking to invest in the US land market. While commercial construction is on the rise, the inventory of homes has been steadily decreasing.

Increase in consumer income, possibility of more easily available financing and historically low interest rates are expected to contribute further to the optimism, for both the land in Urban areas and agricultural land.