Public and private reports this week revealed dramatic improvement in America’s beleaguered housing sector.
According to the National Association of Realtors, sales of previously occupied homes rose 2.1 percent in October to a seasonally adjusted annual rate of 4.79 million. Excluding spikes in 2009 and 2010 when homebuyer tax credits temporarily boosted purchases, that’s their best showing in five years.
Builders broke ground on new homes last month at a seasonally adjusted annual rate of 894,000 units. That's a 3.6 percent gain from September, and it represents an 87 percent improvement from the recession low in 2009.
Applications for building permits, a barometer of future construction, fell 2.7 percent from their four-year high realized in September. But permits to build single-family homes rose to their highest level since 2008.
And the National Association of Home Builders and Wells Fargo report their survey of builder confidence rose five points this month to its highest level since May of 2006, just before the housing bubble burst.
While the housing market recovery still has a long way to go, it is helping support an economy facing a global slowdown and the looming threat of significant spending cuts and tax increases.
Demand for FARMLAND also is the rise, especially in the Corn Belt, where -- despite soaring prices -- sales are booming. Paul Yeager explains.
Steve Deike and his sisters watched this week as the Iowa farm they grew up on, went to the highest bidder this week. It was an emotional day, but one they knew eventually would arrive and Deike says it helped knowing they had the blessing of their late father.
Steve Deike, Landowner: “He said, sometime sooner or later, you’ll sell the farm it is just property. It’s real easy to get sentimental about a family farm and let your heart drive what you should be thinking instead. But nonetheless, it’s still a difficult decision.”
Land sales are booming in rural America, where continued prospects for above-average commodity prices are whetting farmers’ appetites to expand.
One of dozens of sales this week in Iowa featured this 163-acre plot in Butler County. Its agricultural value, commonly known as a Corn Suitability Rating, or CSR, was 75.3. That kind of quality draws a big crowd, but only a handful actually bid on the tract. Eventually, it sold for $12,500.
Auctioneer: “Sold the farm!”
The action was conducted by Omaha-based Famers National Company. Believed to be the largest broker of agricultural land in the nation, Farmers National is on pace to sell $640 million in agricultural real estate sales this year. And Jeffrey Obrecht, who bills himself as “The Dirt Dealer,” says nearly 40 percent of the sales --- some $250 million – will come from Iowa alone.
Jeffrey T. Obrecht, Farmers National Company: “2011 was a good year. I was salesman of the year, ran thought $24 million, I’m thinking that’s pretty good. Well, I’m salesman of the year again this year but I run $56 million. That’s wild.”
While the Drought of 2012 did curtail yields in Iowa, better-than-expected harvests in some areas put a little extra money in farmer’s pockets. And the “Dirt Dealer” is more than happy to lighten their loads.”
Jeffery T. Obrecht, Farmers National Company: “There’s a lot of cash out here right now. Usually when the farm sector has cash they buy two things, iron and dirt.”
Paul Yeager, Clarksville, Iowa: 2012 has been an incredible year for the Dirt Dealer. He says transactions are up nearly 30 percent over last year. And its been driven by a number of factors, but one leads the way.”
Jeffery T. Obrecht, Farmers National Company: “Number one, interest rates. Historically low interest rates. Demand, more land on the market than we’ve seen for awhile, but even with that, the demand is still there. A lot of times when you get an oversupply, the demand is not there. But right now, the demand is there even though we have, technically an oversupply.”
The threat of Washington failing to avert $500 billion in tax increases and $109 billion in spending cuts, before the end of the year also is prompting some landowners to sell now. And Obrecht estimates 90 percent of the crowd at his auctions is farmers looking to expand their operation.
Jeffery T. Obrecht, Farmers National Company: “Probably the most interesting business I’ve ever been in. With the markets the way they are now, never thought I would experience anything like this, high land values, the demand, aggressiveness of people, even with the drought, what that has done, it’s just very, very interesting right now.”
The booming market for land is welcomed by sellers. But for many, the experience is bittersweet.
Steve Deike, Farmland Seller: “I’m not doing cartwheels right now…you sold the family farm. You have all those memories. As I come back to it, the decision was made, we feel good about it at this point.”