Farmland Prices to Keep Holding Steady, Economist Says

Predicting that U.S. interest rates will go up in the next few years, real estate economist Mark Dotzour feels bullish about farmland prices.

“The best investment you can make is in something you know about,” said Dotzour. “If you love farmland, no wonder you want to buy it.”

Dotzour is feeling confident that farmland prices will remain steady without much of a drop “simply because the other investment opportunities are not too exciting,” he said. In terms of investing in stocks and bonds, Dotzour understands the reluctance.

“I’ll be surprised if mortgage rates get above 4% this whole year,” Dotzour predicted.

When the economist looks at other countries and the way they are dealing with economic struggles, he is grateful that the U.S. isn’t printing money like China or Japan seems to be.

“We are in challenging times, and our economy is growing faster and stronger than ever,” said an optimistic Dotzour.

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He warned of putting too much debt into real estate investments, as that is how many people have gotten themselves into a poor financial state. Staying cautious with leverage was his advice. 

Dotzour is basing his investment decisions around the idea that the 10-year treasury will be around 1% rather than 3% next time around. 

“I’ll be surprised if mortgage rates get above 4% this whole year,” Dotzour predicted. He also anticipates a couple of “meaningless rate hikes” by the Federal Reserve.

As for a market black swan, Dotzour doesn’t have any life-changing predictions. The only thing he can imagine is Vladimir Putin “running out of money” before Saudi Arabia, Iran, or Libya, and making destructive moves to get rid of oil production in Iraq and Libya. 

Dotzour spoke on “The Economic Outlook for Investors and Business Decision Makers” at the 2016 Land Investment Expo held in West Des Moines, Iowa. 

 

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