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Bet the farm: Cropland prices soar 20% and Shadow inventory threatens housing recovery
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Land prices in the states centered on Iowa grew at a 15% to 20% clip, annualized, over the last six months of the year, according to Creighton University economist Ernie Goss.Prices were sent soaring by higher commodity prices, as crop failures in some food-exporting countries boosted the demand for U.S. grains and soybeans. For example, corn rose to $240 a ton in December compared with $166 just 12 months earlier."Commodities have been doing quite well," said Goss. "Income is up and everyone wants to salt away some of that cash. They prefer to put it in farmland."Dave Miller just bought an 80-acre farm to add to his two existing properties in Lucas County, Iowa, which includes more than 300 acres of tillable land. "A lot of farmers buy land in good times," he said. "It becomes their retirement portfolio."When he sees land going for below-market prices, Miller grabs it if he can. [Read the full article]
There were 1.7 million homes either owned by the bank or in some stage of foreclosure at the end of the third quarter of 2010, according to a recent report by Standard & Poor's. It would take 44 months, at the current rate of sales, to sell them off -- a 25% increase from the beginning of 2010. (S&P does not count home loans backed by Fannie Mae and Freddie Mac.)This so-called "shadow inventory" may depress home values and delay the housing market recovery."The problem is you have all these properties coming down the pipeline that are nearly certain to hit the market. That's going to be a negative for the supply-demand equation," said Diane Westerback, Managing Director for S&P and an author of the report.S&P defines shadow inventory as properties whose borrowers are (or recently were) 90 days or more delinquent on their mortgage payments, ones currently or recently in foreclosure or that are back in the hands of the banks. [Read the full article]
Previously-owned home sales climbed 12.3% in December to an annual rate of 5.28 million, from 4.70 million in November, according to the National Association of Realtors.That puts sales at the highest level since the homebuyer tax credit expired in June, said Stuart Hoffman, chief economist at PNC Financial Services Group.The December rate came in much higher than expected. A consensus of experts surveyed by Briefing.com had forecast an annualized sales rate of 4.8 million. However, sales were down 2.9% from 12 months earlier and fell 4.7% in 2010."December was a nice finish to the year, but looking at the bigger picture -- home sales and prices have been scraping along the bottom for the last three years," Hoffman said. [Read the full article]
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