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Cycles of Opportunity

Posted by Jonathan Rhodes on April 29, 2013
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While we have seen prices driven well below historic levels, we are already seeing evidence that they won’t stay here for long.

I’m convinced that there’s never been a better time to buy land in recreational communities like the ones we represent at American Land than right now. Why?

It’s about taking advantage of economic cycles as they happen. We haven’t seen prices as low as they are now in a very long time, and this is already beginning to change.  Raw land is the only real estate sector that does not depreciate with age. It’s finite, matures naturally, requires no maintenance, and is certain to recover economically with vigor.  So we can safely advise our clients to take advantage of these low land prices now while the opportunity exists.

Warren Buffet reminds investors to see cycles as opportunities. Rich investors buy when others are selling. And he advises us to “look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.”

The most obvious advantage to investing in the land sector over all the other real estate sectors is that its supply is finite. “Buy Land,” Will Rogers advises. “They ain’t making any more of the stuff.” The other common-sense reason is that it’s low maintenance.  Land does not require you to find a tenant or take care of the plumbing. You can pick up a deed, pay low taxes, and forget about it. You can feel the pride of being a landowner, without a lot of work.

The opportunity in today’s real estate market is that, at least for now, we have a far greater supply than demand. Front page news focuses on foreclosures and how this affects residential housing sales. This downward pressure on prices has affected commercial real estate and land sales as well. While disastrous for some, this has been good for our economic future overall. Most economists and market professionals are willing to admit that prices were inflated beyond what the market would bear, and readjustment is natural and just.

Our current corrective cycle has, however, become overzealous in some areas. Those of us on the inside track have already seen prices driven well below actual value. They need readjustment, and are slowly rising, as we witness the best properties being snapped up more quickly at fair prices. All this mounting evidence reveals that yes, now is the time to buy.

In our sector, we’re glad to see land prices going up again. Much of the land in recreational and retirement communities like ours was originally purchased for retirement or vacation plans, and sadly so many of these dreams were unfulfilled over the years. So a finite number of properties have re-entered the market, as exceptionally good values, for others to build new dreams upon.

The Universal Dream lives on. That dream revolves around the joy of land ownership. We all want a piece of earth to call our own. Now is your time to claim it.

 We always live in an uncertain world.
What is certain is that the United States will go forward over time.

­–Warren Buffet


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