Connect with us

News

Think your home value is soaring? Talk to a farmer

Published

on

Think your home value is soaring? Talk to a farmer

DES MOINES, Iowa — Fourth-generation corn and soybean farmer Jeff Frank doesn’t feel rich, but simply based on the skyrocketing value of his land in northwest Iowa, it’s an apt way to describe him, even if he laughs at the idea.

He lives in the same nearly century-old house, grows veggies in the family garden and shops at the same grocery store about 15 miles (24 kilometers) down the road. “We live the same way we have all of our lives,” he said.

Still, even if Frank’s life hasn’t changed, the several hundred acres he owns about 80 miles (129 kilometers) northwest of Des Moines have suddenly made him worth millions of dollars.

It may come as a surprise to city dwellers excited by their home values that countless farmers like Frank are actually experiencing a real estate boom that makes residential prices pale in comparison. While median existing-home prices rose by 15.8% in the U.S. last year, farmland values went up about double that rate in places like Iowa.

“I’m definitely surprised by the magnitude,” said Wendong Zhang, an economist at Iowa State University who oversees an annual farmland value survey.

The rising values, especially in the Midwest, are due to high prices being paid for the key commodity crops of corn and soybeans, plentiful harvests in recent years coupled with low interest rates and optimism the good times will continue.

But they’re a mixed blessing. They’re enriching farmers who already have a lot of land, but making it much harder for small operators or younger farmers starting out to get land unless they happen to inherit it.

Most purchases are by operations that see the value of larger scale, seizing the chance to buy nearby land.

“If you miss this opportunity, you may not get another chance,” Zhang said, describing the current mood.

As for consumers, higher land costs typically don’t affect grocery prices.

Historically, farmland values rise and fall, but in the past couple decades they have mostly risen, and in the past year they have risen a lot — 33% in Frank’s part of the state and 29% throughout Iowa, one of the nation’s top agricultural states. Agricultural prices also have soared elsewhere in the Midwest and have climbed in most other parts of the country, too.

Federal Reserve Banks in Chicago and Kansas City reported double-digit increases in Illinois, Wisconsin, Indiana, Missouri and Nebraska.

In Iowa, average farmland has risen from $7,559 an acre in 2020 to $9,751 an acre in 2021.

Nationally, farmland was up an average of 7% but that doesn’t include the last half of 2021, when prices really took off in many areas.

Farmland prices have even climbed in California despite concerns about persistent drought. In 2021, the average prices of $10,900 an acre was up 9% from 2020.

The land purchases augment an existing national trend of more agricultural production coming from ever-larger farms.

Dan Sumner, an agricultural economist at the University of California-Davis, credits some of the rising value in switching to higher-value crops, such as replacing alfalfa with nut trees.

Overall, though, Sumner said farmers are feeling good about their future.

“It reflects confidence in the economics of agriculture,” he said.

The upswing follows tumultuous years of trade wars, market breakdowns due to the coronavirus pandemic and drought in much of the West.

For individual farmers, the biggest benefit of rising values is that they can borrow money at better rates for annual needs like seed and fertilizer and longer-term investments like tractors and even more land.

The high prices have prompted plenty of people to buy and sell land, leading to a record of $765 million in agricultural land sales last year overseen by Farmers National Company, one of the nation’s largest landowner services companies.

Randy Dickhut, a Farmers National real estate broker in Omaha, Nebraska, said a more typical year would see about $500 million in sales.

“It’s been very busy,” Dickhut said. “It’s certainly easy to sell.”

But Holly Rippon-Butler, who runs a dairy with her parents in upstate New York, called the farmland prices increases “just nuts.”

“The hard reality is, buying land is almost impossible unless you have some preexisting source of generational family wealth,” said Rippon-Butler, who works with the National Young Farmers Coalition, an organization the among other priorities advocates for policy changes and public funding that would enable more people to have access to land.

Given high land prices, Rippon-Butler said beginning farmers she encounters typically work as little as a quarter-acre of land and see 20 acres as a relatively large operation. Many farmers also rent land, and as values rise, so do rental rates.

Frank, the farmer in northwest Iowa, said that even though he’s technically wealthier now, it hard for him to expand his holdings as he prepares to pass along the property to the next generation.

“I have a son who farms with me and of course he’d like to expand but buying farmland right now is a big undertaking,” he said. “Even for a small farm you’re talking about millions of dollars.”

___

Follow Scott McFetridge on Twitter: https://twitter.com/smcfetridge

News

Jim Hagedorn family suing widow Jennifer Carnahan for medical expenses

Published

on

Jim Hagedorn family suing widow Jennifer Carnahan for medical expenses

Family members of the late U.S. Rep. Jim Hagedorn of Minnesota say his widow, Jennifer Carnahan, who is running to replace her husband in Congress, hasn’t come through on a promise to pay them back medical expenses related to his cancer treatments.

Carnahan calls it a political stunt.

Two lawsuits filed Monday by Hagedorn’s mother, stepfather and sister allege they helped pay for cancer treatments he received at Envita Medical Centers in Arizona. Carnahan made a “clear and definite promise” to use inheritance she was to receive after his death to reimburse his family members, according to the complaints.

Carnahan said Hagedorn’s estate is required to go through the probate process in the courts to determine how to divide up his assets and there is nothing more she can do at this time.

“Grief affects everyone differently. Handling the affairs of my husband’s estate should be a private matter,” Carnahan said in a statement. “It’s unfortunate a very simple process has been turned into a political stunt.”

Hagedorn died after a long battle with kidney cancer on Feb. 17. He was told in January that there were no more treatments available for him at Mayo Clinic in Rochester, Minnesota, which is his congressional district, so he sought additional treatments at the facility in Scottsdale, Arizona, the Star Tribune reported.

A suit filed by Hagedorn’s mother, Kathleen Kreklau, and stepfather said they used $10,000 of a $25,000 home equity loan to help cover medical costs. In a separate complaint, Hagedorn’s sister, Tricia Lucas, said she charged $10,000 on a credit card to help cover the costs of his treatment and was promised repayment by Carnahan.

Both lawsuits allege Carnahan was to receive a $174,000 death benefit from the United States government after Hagedorn died, as well $174,000 from his life insurance policy.

Carnahan closed her statement by saying she wishes “Jim’s family well and know this time has been very difficult for all of us.”

Continue Reading

News

Explainer: Why is Wall Street close to a bear market?

Published

on

Explainer: Why is Wall Street close to a bear market?

NEW YORK — The bears are rumbling toward Wall Street.

The stock market’s skid this year has pulled the S&P 500 close to what’s known as a bear market. Rising interest rates, high inflation, the war in Ukraine and a slowdown in China’s economy have caused investors to reconsider the prices they’re willing to pay for a wide range of stocks, from high-flying tech companies to traditional automakers.

The last bear market happened just two years ago, but this would still be a first for those investors that got their start trading on their phones during the pandemic. For years, thanks in large part to extraordinary actions by the Federal Reserve, stocks often seemed to go in only one direction: up. Now, the familiar rallying cry to “buy the dip” after every market wobble is giving way fear that the dip is turning into a crater.

Here are some common questions asked about bear markets:

WHY IS IT CALLED A BEAR MARKET?

A bear market is a term used by Wall Street when an index like the S&P 500, the Dow Jones Industrial Average, or even an individual stock, has fallen 20% or more from a recent high for a sustained period of time.

The S&P 500 index slid 165.17 points Wednesday to 3,923.68 It’s now down 18.2% from its high of 4,796.56 on Jan. 3. The Nasdaq is already in a bear market, down 29% from its peak of 16,057.44 on Nov. 19. The Dow Jones Industrial Average is 14.4% below its most recent peak.

The most recent bear market for the S&P 500 ran from February 19, 2020 through March 23, 2020. The index fell 34% in that one-month period. It’s the shortest bear market ever.

WHAT’S BOTHERING INVESTORS?

Market enemy No. 1 is interest rates, which are rising quickly as a result of the high inflation battering the economy. Low rates act like steroids for stocks and other investments, and Wall Street is now going through withdrawal.

The Federal Reserve has made an aggressive pivot away from propping up financial markets and the economy with record-low rates and is focused on fighting inflation. The central bank has already raised its key short-term interest rate from its record low near zero, which had encouraged investors to move their money into riskier assets like stocks or cryptocurrencies to get better returns.

Last week, the Fed signaled additional rate increases of double the usual amount are likely in upcoming months. Consumer prices are at the highest level in four decades, and rose 8.3% in April compared with a year ago.

The moves by design will slow the economy by making it more expensive to borrow. The risk is the Fed could cause a recession if it raises rates too high or too quickly.

Russia’s war in Ukraine has also put upward pressure on inflation by pushing up commodities prices. And worries about China’s economy, the world’s second largest, have added to the gloom.

SO, WE JUST NEED TO AVOID A RECESSION?

Even if the Fed can pull off the delicate task of tamping down inflation without triggering a downturn, higher interest rates still put downward pressure on stocks.

If customers are paying more to borrow money, they can’t buy as much stuff, so less revenue flows to a company’s bottom line. Stocks tend to track profits over time. Higher rates also make investors less willing to pay elevated prices for stocks, which are riskier than bonds, when bonds are suddenly paying more in interest thanks to the Fed.

Critics said the overall stock market came into the year looking pricey versus history. Big technology stocks and other winners of the pandemic were seen as the most expensive, and those stocks have been the most punished as rates have risen.

Stocks have declined almost 35% on average when a bear market coincides with a recession, compared with a nearly 24% drop when the economy avoids a recession, according to Ryan Detrick, chief market strategist at LPL Financial.

SO I SHOULD SELL EVERYTHING NOW, RIGHT?

If you need the money now or want to lock in the losses, yes. Otherwise, many advisers suggest riding through the ups and downs while remembering the swings are the price of admission for the stronger returns that stocks have provided over the long term.

While dumping stocks would stop the bleeding, it would also prevent any potential gains. Many of the best days for Wall Street have occurred either during a bear market or just after the end of one. That includes two separate days in the middle of the 2007-2009 bear market where the S&P 500 surged roughly 11%, as well as leaps of better than 9% during and shortly after the roughly monthlong 2020 bear market.

Advisers suggest putting money into stocks only if it won’t be needed for several years. The S&P 500 has come back from every one of its prior bear markets to eventually rise to another all-time high. The down decade for the stock market following the 2000 bursting of the dot-com bubble was a notoriously brutal stretch, but stocks have often been able to regain their highs within a few years.

HOW LONG DO BEAR MARKETS LAST AND HOW DEEP DO THEY GO?

On average, bear markets have taken 13 months to go from peak to trough and 27 months to get back to breakeven since World War II. The S&P 500 index has fallen an average of 33% during bear markets in that time. The biggest decline since 1945 occurred in the 2007-2009 bear market when the S&P 500 fell 57%.

History shows that the faster an index enters into a bear market, the shallower they tend to be. Historically, stocks have taken 251 days (8.3 months) to fall into a bear market. When the S&P 500 has fallen 20% at a faster clip, the index has averaged a loss of 28%.

The longest bear market lasted 61 months and ended in March 1942 and cut the index by 60%.

HOW DO WE KNOW WHEN A BEAR MARKET HAS ENDED?

Generally, investors look for a 20% gain from a low point as well as sustained gains over at least a six-month period. It took less than three weeks for stocks to rise 20% from their low in March 2020.

___

Veiga reported from Los Angeles.

Continue Reading

News

‘Nobody likes it’: Orioles’ Trey Mancini responds after Aaron Judge, Yankees take aim at Camden Yards’ left field wall

Published

on

‘Nobody likes it’: Orioles’ Trey Mancini responds after Aaron Judge, Yankees take aim at Camden Yards’ left field wall

Asked about comments from New York Yankees manager Aaron Boone and outfielder Aaron Judge about Camden Yards’ new left field wall, Trey Mancini, the longest-tenured Oriole, acknowledged it’s not the first time he’s heard such complaints from visiting hitters.

“Nobody likes it,” Mancini said with a laugh. “No hitters like it, myself included.”

Both Boone and Judge were critical of the Orioles’ changes to their iconic ballpark after Tuesday’s 5-4 victory, in which Judge homered twice but lost a potential third home run on a ball that would have left every other ballpark, as well as Camden Yards a year ago. Judge called the changes, which featured moving the left field wall back nearly 30 feet and increasing its height by more than five feet to reduce the ease of homering to that portion of the ballpark, a “travesty.”

“It looks like a create-a-park now,” Judge told reporters, with Boone adding, “Build-your-own-park got him.”

Entering Wednesday, Judge’s lost home run is one of six balls hit by visitors that would have likely left Camden Yards with the ballpark’s prior dimensions, according to tracking from The Baltimore Sun. The Yankees were responsible for half of those in the previous two days; no visiting player had cleared the wall entering Wednesday’s game.

Mancini has twice lost a home run to the new wall, christening it with a double off the padding during Baltimore’s first homestand. The Orioles have lost eight home runs to the wall, with Ryan Mountcastle, Austin Hays and Anthony Santander managing to hit balls over it.

As he and other Orioles hitters have done since plans for the wall were first reported this offseason, Mancini repeatedly noted that “it is what it is.” Mountcastle, like Judge, has hit a ball that only stayed in because it was hit at Camden Yards, a blast hit off the very top of the new wall. Mancini said the players are able to laugh about such things, knowing it’s out of their control.

“There’s nothing we can do to change it,” Mancini said. “It’s nothing you can be thinking about when you’re up at the plate. But it doesn’t make it any less tough when you hit a ball that you think should definitely be a homer.”

Tuesday’s comments mark the second time this month New York has been involved in ballpark dimensions discourse. After Gleyber Torres’ walk-off home run May 8 over the short right field porch at Yankee Stadium, Texas Rangers manager Chris Woodward said the ball would have been “an easy out in 99% of ballparks. … He just happened to hit it in a Little League ballpark.” In response, Boone quipped Woodward’s “math is off” because there are 30 parks, meaning 99% wouldn’t be possible.

Since Yankee Stadium opened in 2009, Camden Yards is the only major league venue where more home runs have been hit.

Orioles manager Brandon Hyde, though, didn’t take a shot when Boone critiqued his team’s home park, saying he would “take the high road.” He referenced comments from Minnesota Twins manager Rocco Baldelli about how the changes to Camden Yards require right-handed hitters to, as Hyde put it, “become true hitters.”

“Before, fly balls to left field were homers, and it was really unfair a lot of times,” Hyde said. “It’s just playing more fair than before.”

The Orioles’ hitters, though, will naturally be affected by it more than those of any other team, so comments like Judge’s and Boone’s fall somewhat flat to Mancini. The changes came at a poor time for Mancini, who is a potential free agent and whose future earnings depend on a strong 2022 season.

“We play half our games here, so …,” Mancini said. “I know that [Judge’s] ball probably should be a homer, but yeah, we’ve had quite a few, too, that should have been. Like I said, we play half our games here, so not great as a right-handed hitter.

“It’s still our job to go out there and play, so complaining about it’s not going to help us out. But that doesn’t mean we necessarily like it, either.”

()

Continue Reading

Trending