The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: Les H who wrote (5627)	9/27/2002 12:20:36 AM
From: Elroy Jetson	Read Replies (1) of 306849

Limited supply drives up farmland . . . Hilarious. I'm very familiar with this cycle. The last time I did a study of this for Chevron Corp in 1981, I just divided (declining) California farm income per acre with (rapidly rising) California farm land prices. The return on farm land had fallen from 9.5% to 1.75%. It was only a year or two from becoming a negative return. Well, no surprise, it didn't happen. Farm land prices fell dramatically (about 60%) and slowly farm incomes increased. This is simply a cycle repeated over and over. In 1981 this was reported as "declining farmland" as well. Just like a limited supply of stocks led to "permanantly" higher Price to Earnings ratios. I can't believe people fall for this again and again.

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