THE LORANDA GROUP, INC

About 7-8 years ago we watched the recreational land market explode.  It seemed as if everyone wanted to own 40 acres of timber in the middle of nowhere to hunt, fish, camp, bird watch, etc.  In some areas of the Midwest, wooded acreage was outselling tillable acreage.  Imagine that – a parcel of land that returns nothing outselling a piece of ground across the road boasting a solid return .  The market wasn’t driven on dollars and cents (and some people may throw sense in there too).  It was driven by the desire of people located in and near metropolitan areas to have a place to escape to out in the country.  We routinely fielded calls from buyers that would travel as far as 3-4 hours from Chicago and St. Louis to find that perfect spot.

Around 2007 or 2008, the recreational market began to lose steam.  So what happened?  It all comes back to the supply and demand curve.  Once “recreational land” became the flavor of the day, every landowner believed that the small patch of timber they had always valued at zero was worth more than their farmground.  As supply (and listing prices) surged and more and more marginal recreational properties came on the market, the momentum started to shift to the buyer’s side.  All of a sudden, a recreational land buyer might have two dozen pieces of timber to choose from in the same county.  And unlike farmland, which can be compared by using soil types, fertility and yield histories, recreational ground can’t always be compared objectively.  When every landwoner claims that “My property is loaded with deer and turkey!  It’s the best hunting around!”, it’s hard to prove, or disprove, that kind of claim.  In the late summer of 2008, while the market was already slipping due to too many properties for sale, the economy crashed and took what remained of the recreational market with it.  Gone were the buyers using discretionary income to buy their dream vacation spot.  Many of these people shifted their focus from buying land to trying to hold onto their job and pay their bills.  In many areas, the recreational market dropped by 50 – 60% in what seemed like overnight.

However, over the last 8 to 10 months, the recreational market has seemed to pick up some traction. While we are nowhere near the highs that a lot of areas saw back in the early to mid 2000’s, buyers are starting to look again.  With the supply of available land much lower, there is just enough competition to breathe some life into this market.  So, if you have been sitting on the sidelines waiting to see what is going to happen, it may not hurt to see where the market is at in your area.  As with farmland, houses, etc., every market in every region is different.  In the more popular hunting areas, the market for recreational land has come back significantly.  In other, less popular areas, it may be taking a little more time.