Why Buy Land Now?

Think about anyone you know who has lost their retirement fund because it was invested in places they assumed were safe, only to find out those investments were anything but.

If you don’t know someone personally that this has happened, you’ve certainly heard about plenty examples of people who have lost their life savings over the recent months, absolutely no fault of their own. Well, now is a good time to start considering potentially smarter ways to invest. Land is one of those ways.

Land cannot be taken away from you. In addition, one can just let it sit there while you can live thousands of miles away and not worry about it. It can’t be destroyed, it doesn’t require much maintenance, it can’t be stolen, forged, reproduced and if you buy it without a mortgage it can never be called away from you.

Granted, buying land like this is not as easy as hitting a key on your online brokerage account and buying yourself 1,000 shares of AIG or LEH, but as we’ve seen, these assets can become worthless overnight and with a $600 trillion derivative guillotine overhead, it may be worth doing some legwork to locate this type of property for all the reasons I’ve mentioned above.

Investors are preparing to buy more than one-half of the usable land in the United States in the next ten years, approximately 1.6 billion acres. And many buyers continue to look to land as a haven — a tangible asset to turn to when things look uncertain elsewhere, said Mark Dotzour, chief economist at the Real Estate Center.

We have some preliminary evidence that the rate of price increase is scaling back,” another economist at the Real Estate Center said. “The past five years have been phenomenal. It’s not possible to sustain that kind of an increase over the long term.”

“As long as people are afraid of Wall Street, they’re going to keep buying land,” said Mark Dotzour, chief economist at the Real Estate Center. “We’ve gone through Enron and changes in accounting, and now we’ve got this situation where the level of confidence in Wall Street has never been lower. People are really scrambling to find a place to put money. There’s a certain group of people who are going to turn to land because they know it and can see it. I think land is going to remain an attractive investment.”

But there’s a caveat.Dotzour said the Wall Street turmoil has eroded nest eggs.

“There’s going to be a certain group of people who has found their stock portfolio has declined so much that they will postpone buying land. This complete calamity in the stock and bond markets will put a lot of potential land buyers on the sideline,” he said.

And some potential land buyers are watching Washington to see what might be in store for capital gains taxes. “I think we’ll start to see political clarity soon,” Dotzour said. “You’ve got the results of the election in November, and the first 100 days to initiate whatever kind of mischief the new administration is going to foist off on the U.S. After the 100 days, we’ll know what’s going on.”