Date of this Version
Cornhusker Economics (January 16, 2013)
One lesson to be learned from economic history is this: real estate booms, create bubbles, which lead to real estate busts. Having studied the agricultural land markets in Nebraska for nearly 40 years, I’ve witnessed the complete cycle: from the 1970’s boom through the 1980’s bust, and the subsequent economic toll of foreclosures and asset devaluation which lingered across the agricultural landscape for more than a decade. To be sure, individuals, families and the business community learned hard lessons from the experience. Vowing to not fall into that trap again, market participants and financial institutions generally embraced a more conservative real estate investment strategy. Expected income earnings, with a good measure of risk management factored into bid levels led to a more deliberate land market pattern for a number of years. In fact, up until just five or six years ago, the market for agricultural land was generally moving on a gradually upward trajectory that was reflective of historical income levels and fairly conservative expectations.