Welcome to Cranky Puppy Farm!

This blog belongs to two Gen X-er's smackdab in downtown Kansas City where we've been renovating and decorating two old Victorians built in the 1890's. Our life is filled with 3 demanding Pomeranians (1 of them cranky, of course), honking cars, noisy neighbors and the hustle and bustle of city life but we dream of the day when we can move to our 40-acre farm and hear nothing but the wind and the cows next door. Until then, we're chronicling our triumphs and mishaps here as we try to garden and preserve on 2 city lots, raise chickens, and learn all those things we should have learned from our grandparents. Welcome to our world - we hope you'll stay awhile!

The Rising Cost of Land

Saturday, March 09, 2013

"Portrait of a Lonely Barn" - Bates City, Missouri
 
We've talked before about the rising cost of milk.  But I guess I didn't realize how much of an effect the economy has had on the price of good, arable land.

J. and I headed to an auction this morning in Bates City, which is a good 30+ minutes to the east of Kansas City down I-70.  When we took the exit and immediately found ourselves looking at the snow retreating from fields full of dirt black as coal, I took a deep breath and relaxed.  It felt like home.  It smelled like Spring. 

Sometimes we know the stories behind estate auctions but this one wasn't the usual run-down-family-farm-with-a-paintless-barn-that-is-barely-standing-after-the-old-farmer-passed-and-no-wanted-to-follow-in-his-footsteps story.  The brick house with its 3 garages looked brand new and it sat on 41 acres with nice-sized new barn and a second tract of 20+ acres for sale separately.  In the living room was a whiteboard that showed the bids on the house and the 2nd tract.  Someone bought them both for $535,000.  I marveled to J. that it seemed like a really high price. 

Then we walked down to the barn to look at the 2005 John Deere 5103 tractor and Gator that they were selling.  Both went high - the tractor sold for $12,000 and it didn't have a loader like mine.  Knowing that it would be $6 - 7K to add the loader, I feel good about paying $15,000 for mine last year with the loader.  I s'pose it always feels good to think you got a good deal.

And that got me to thinking about our farmland.  We bought it over a decade ago and paid $72,000 for 40 acres with a brand new 30' x 40' Cleary building on it.  I'd say the going price to have that barn built was $10,000; maybe $12,000 with the concrete work and clearing.  Doing the math, that's $1,500 per acre.  We scrimped and saved to pay for it and the mortgage on our house, but it was a labor of love.

But this auction?  If we say the house was worth a generous $250,000, that land sold for somewhere around $5,000 per acre.  And that got me to thinking some more.  So I did some looking at UnitedCountry and LandsOfAmerica and was dumbstruck to see a farm just down the road for us selling for over $4,000 per acre.  Holy crow!  We could sell and make a tidy little profit if we were so inclined.

Courtesy of Univesity of Missouri Extension. Our area had the highest increase!
 
When I told J. what I had found, his reply was "Well, unlike the dollar bill, you can't make more of it.".  Yuuuuuuup, he's right.  Land is a hedge against a devaluing dollar and a world gone mad.  In fact, over the last 100 years investment in farmland has only experience three brief periods of negative returns (1930s, 1980s, and 2008).

Am I selling?  No way, Mr. Auctioneer.  No way.




I've shared this post with this week's Weekly Top Shot. If you want to see some awesome photography, that's the place to be!

3 comments:

  1. Keith and I have been talking about the same thing. We have recently seen two properties here in our area, near Tonganoxie, with minimal housing on them... going for nearly 12,000 an acre! We both burst out laughing when we realized it! I guess we'll hold onto our little spot, too.

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  2. Was just talking w/a cousin about the kids that will be left behind that don't want to take care of land, especially when they see what they can get for it. We think the old 'family farm' will be sold as soon as they see what the taxes are on it!

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  3. Lovely post and photo ~ Land is and real estate in MA is far worse in price ~ World has gone mad ~ Wishing for you whatever it is that you are wishing for yourself ~ Enjoy ^_^

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