Land Auctions During the Financial Crisis
I attended a county tax auction for land on September 24, 2008 in Sandoval County, NM. Despite the financial crisis due to the credit crunch, falling stock market and falling Real Estate prices there was a healthy attendence at the tax auction. Approximately one hundred bidders participated and this was about the same as the county auction in April of this year. The auction prices were also similar.
I talked to some of the participants and they were hoping that there would be a lower participation and hence lower land prices, but that was not the case.
People are still considering land to be a solid investment.
by Andreas Paramonoff
Tags: financial crisis, land, real estate, tax auctions
October 20th, 2008 at 6:29 pm
Most of the participants in the auction must be speculators looking for the next bubble. First they drove up the prize of worthless dotcom companies. Then they drove up home prices through the roof, and in the process brought the world economy to its knees. Seems like rural land is their next target. These guys never learn ?
October 21st, 2008 at 12:28 am
Given that the auctions are for distressed properties I would not say the auction is contributing to a bubble, but is just putting properties back on the tax rolls.
Land differs from the dot com investments because it is real property that has inherent value rather than stocks that had no proven value.
Land also differs from developed real estate because it can’t be overbuilt like houses. Therefore no excess supply was created and no drastic correction. Prices were also not driven higher by easy mortgages since banks don’t generally give mortgages for vacant land.