Why Buy Land Now?

The market for rural land in most areas is transparent. Land of all types is a finite resource. Good land — however defined — is even more finite.

The proposed government bailout could help home prices if the banks that get relief turn around and make new loans, but it’s not clear that they will. More important, housing prices are not just a factor of mortgage rates.

Foreclosures and slow sales have left 4-million-plus homes on the market, nearly half a million more than two years ago. That could get worse before it gets better if rising unemployment translates to fewer buyers to work off that fat inventory. “In the long run none of what we’re doing now is going to matter that much to real estate,” says Wellesley economics professor Karl Case. “Home prices have to with the scarcity of land and perception of that scarcity.”

Until homes for sales are again scarce, it will continue to be better to be a buyer than a seller. So unless the government decides to buy back all of the foreclosed homes and knock them to the ground and give housing a mulligan, then the opportunities to grab some of this scarce commodity will be present.

If the 850,000 new households that are usually created each year crawl out of the housing crisis and back into the market then prices will certainly go up. So if you legitimately can afford it, buying land now is an attractive investment and has phenomenal benefit over the long haul. There are still some housing inventory to work off, but with interest rates down and pricing at or near rock bottom it really is an unbelievably good time to purchase property.

But this buying window won’t last long. Even former Federal Reserve chairman Alan Greenspan wrote, “More conclusive signs of pending home price stability are likely to become visible in the first half of 2009.” Once the housing market finds its footing, markets will be able to tackle the core issues of the credit crisis. And the frozen credit markets will open back up and the U.S. home prices will again be moving up and to the right.