Market Perspective

Twelve Reasons to Buy Land Now – Reason Number 9

Posted by on Jul 3, 2012 in Ned Massie, Perspective | 0 comments

The Land Market Cycle or the Economic Cycle The oldest advice for making money through investments is “buy low and sell high”.  Unfortunately, most investors do the reverse.  They buy in the excitement of the peak of the market and then get nervous and sell in the trough of the collapse that invariably follows: Therefore, the very best investments are made in the trough of an economic cycle, not at the peak.  We’re in the trough.  Our database indicates that we are in the bottom of the land market cycle and that this is the time to purchase. Purchasing today means the following benefits for an investor: There is a significant variety of properties from which to choose; The prices are lower than they have been for a period of years; There is less competition from other buyers. That combination means that you should be able to make an excellent purchase of an excellent piece of land today at a very reasonable price.  The critical part is understanding that not all tracts of land are the same, much less equal in terms of potential values. We believe that those investors who buy good tracts of land today will look exceptionally brilliant in five years.  Let us help you.  We enjoy making our clients look brilliant....

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Twelve Reasons to Buy Land Now – Reason Number 8

Posted by on Jun 26, 2012 in Ned Massie, Perspective | 0 comments

Commercial Land Use Trends In our last two segments, we have talked about the importance of demographics, otherwise known as population growth.  The impact of increased population is not just in the housing market via apartments, single family, etc. The impact is also in workplaces, shopping centers, industrial/distribution centers and related uses of land.  Undoubtedly, the impact of technology is changing the way America works and shops.  It is also having a radical influence on the use of land. Twenty-five years ago, a large distribution center was 150,000 square feet.  Today, the norm that we are hearing about is 600,000 square feet and a very high percentage of distribution centers are in the 1M square foot range.  For a frame of reference, 1M square feet of distribution center consumes approximately 80 acres of land, not including any of the environmentally sensitive areas that have to be acquired, but cannot be used. The evolution of our society, driven by technology and population growth, is having a huge impact on land.  The best land investments occur when land is acquired at an agricultural use, but sold for a use that society values higher than agricultural use of land. Many restrictions are occurring in the marketplace today impacting the use of land.  This means that land that can be used residentially or commercially will experience greater demand in the midst of less supply.  Typically that combination means higher prices.  Talk with us.  We would love to help you take advantage of this opportunity to buy good land ahead for what is coming. We believe that those investors who buy good tracts of land today will look exceptionally brilliant in five years.  Let us help you.  We enjoy making our clients look...

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Twelve Reasons to Buy Land Now – Reason Number 7

Posted by on Jun 20, 2012 in Ned Massie, Perspective | 0 comments

Providing Housing Humans, for the most part, gave up living permanently in caves or tents centuries ago.  Today new homes are a marvel of technology.  Generation Y, which is currently between the ages of 11 and 31, is the largest generation of Americans ever.  And they are the most high-tech generation of Americans ever. Those two facts describe what is about to occur in the new housing industry.  Gen Y wants to purchase a new high-tech home.  Most Gen Y’s cannot afford a $500,000 home.  They can afford a starter home.  They are also having a huge impact on demand for apartments. Every community should want Gen Y as residents because they are the high-tech knowledge workers that businesses want today.  Communities that push Gen Y away with high housing prices will suffer economically in the future because they won’t have the knowledge workers living within their boundaries and therefore they will not attract new businesses. But because of their size and because of their desires, the housing industry is just beginning to experience the impact of Gen Y.  Although the National Association of Homebuilders, NAHB, says that the housing industry is approximately 15% of the American economy, when I was in Grad school in ’93, my estimate was that the housing industry tentacles approach more in the range of 25% of the American economy. Probably Dr. Bernanke is focused on dropping mortgage interest rates to levels not seen before in our industry in order to make housing more affordable, thereby increasing the demand for housing and the absorption of housing units on the market.  Since you cannot build a new house or apartment on a left-handed sky hook, the net effect of his efforts will be an increase in demand for land. We believe that those investors who buy good tracts of land today will look exceptionally brilliant in five years.  Let us help you.  We enjoy making our clients look...

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Twelve Reasons to Buy Land Now – Reason Number 6

Posted by on Jun 13, 2012 in Ned Massie, Perspective | 0 comments

Population Growth is a Positive Most of my business career, the anti-population growth forces have gained in power.  Today they often dominate, if not control, every discussion on economic growth and land use.  That is unfortunate. Being a country boy, I had concerns as I grew up and started my career about population growth.  However, I visited Texas in 1987 and ’88 during the height of the Savings and Loan crisis.  From those trips and study, I realized that no growth and negative growth was a whole lot worse problem than the issues associated with population growth. Today, the United States is one of the few developed countries in the world that is having population growth.  Although the number of babies born each year has declined from the peak of just a few years ago because of the recession.. our USA population continues to grow and that is a positive force in our USA economy. The Census Bureau suggests that because of population growth in the 47 years between 2003 and 2050, the United States will need to replicate all the houses, utility systems, and commercial properties that were built between 1607 when Captain John Smith placed his foot on the ground in Jamestown, Virginia, and 1950.  Our children will save us… While land in general will benefit from what is ahead of us, well located land will benefit even more than other tracts.  In fact, over my almost 40 year career there has been no better investment than well located land.  Well located means that it will particularly benefit from the growth that is going to occur. We believe that those investors who buy good tracts of land today will look exceptionally brilliant in five years.  Let us help you.  We enjoy making our clients look...

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Twelve Reasons to Buy Land Now – Reason Number 5

Posted by on Jun 6, 2012 in Ned Massie, Perspective | 0 comments

Commodities When the financial panic and crash hit the world in 2008, Chairman Bernanke and Secretary of the Treasury Hank Paulson, reacted in a knowledgeable and expert manner.  The Chairman of the European Central Bank chose instead to raise interest rates and lecture those two Americans as being foolish. Four years later we see the stark difference in the two economies.  The United States is having a tepid recovery and the European market is in recession, again.  The current ratio between the Euro and the US Dollar is unsustainable.  I do not know how to invest in currencies and therefore it is dangerous for anyone to follow my suggestion, however, it appears to me that a knowledgeable investor might “short” the Euro because it has no place to go except down. Because of the apparent ineptness of the European Central Bank (ECB) and the structure of the Euro community, the safest prediction is that interest rates in Europe will be exceptionally low for a very long time.   Continued European banking system turmoil and the ECB behind the curve, those low Euro interest rates will impact our American rates. Logically, the Fed will not want to raise rates disproportionately high in the future, short of some overwhelming, compelling reason.  Raising US interest rates too high would result in a serious economic dislocation because it would exaggerate the most likely Euro decline as the dollar gains. Part of this scenario depends on whether Obama gets re-elected leaving us four more years of being in the ditch economically, or Romney gets elected who at least understands capitalism, management, and leadership. A prolonged period of low interest rates in Europe will influence the American interest rates keeping ours lower than they might be otherwise.  This will ultimately encourage a flood of money into hard assets, as inflation rears its ugly head.  In the near term, it means that assets such as land are attractive because their rates of return are exceptionally competitive with those that can be earned by Treasuries, money market accounts, etc. As inflation occurs, land prices will increase.  As commodities, such as timber, increase in value because of both inflation and demand, those price increases will also increase the return to timber land owners.  Meanwhile, Treasuries and bonds purchased today will decline in value as interest rates increase. We believe that those investors who buy good tracts of land today will look exceptionally brilliant in five years.  Let us help you.  We enjoy making our clients look...

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Twelve Reasons to Buy Land Now – Reason Number 4

Posted by on May 29, 2012 in Ned Massie, Perspective | 0 comments

Inflation Since 2008, the Federal Reserve has tripled the size of the assets that they own.  You hear that in the media, but what does that actually mean? Buying and selling financial assets is the way that the Federal Reserve controls the amount of money that is in circulation and therefore, interest rates.  Over the last several years as they have fought a valiant fight against deflation, the Federal Reserve has purchased assets because one of its major tasks is to be the buyer of last resort. In a financial crisis, financial assets plummet in value as everyone seems to head for the exits simultaneously, which increases the panic as everyone tries to get cash.  Historically there has to be a “Buyer of Last Resort” that will step in and acquire those assets providing liquidity to the market in order to break the downward spiral.  In the USA, that is the key role of the Fed, and they have played it beautifully. However, being the Buyer of Last Resort since 2008 they have tripled their balance sheet of financial assets.  Additionally, to discourage saving and encourage investments they have dropped interest rates to quite unusually low levels. By purchasing assets, the Fed has flooded the market with money thereby potentially setting the stage for inflation.  In our mind there is no doubt that inflation is coming.  The questions are when and how much. Our guess is that if there is a change of administration in November, the economy will begin to recover as some of the unusual $7 Tn on the sidelines begins to move back into the economy.  Under that scenario, we will probably see inflation in 2014 and beyond.  While we are not smart enough to be able to predict the amount of inflation, unless the Fed is especially successful in removing the excess liquidity without causing a recession, the inflation will be significant. In inflation, hard assets thrive.  In our analysis land, the source of all wealth, will benefit the most.  Buying now means that you will be ahead of this curve whenever inflation begins to move up. We believe that those investors who buy good tracts of land today will look exceptionally brilliant in five years.  Let us help you.  We enjoy making our clients look...

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