Mesquite Market

Let’s start with the easy pieces, the edge pieces, the positive aspects of the current housing market.

Home sales are up in Mesquite, Nevada from 15 closings in January 2009 to 39 in January 2010, huge increase in closings. Price per square foot dropped from an average of $120 in January 2009 to $100 per square foot in January 2010. This was stimulated by Federal tax dollars in the form of tax buyer credits that would be your money!

Single family new home building permits are up in Mesquite from 1 in January 2009 to 22 in January 2010. That adds to the competitiveness of the market, the supply side.

Trying to keep it positive here, mortgage interest rates are still near historic lows.

The Home Builders Index of confidence rose 2 points to 17. A score of 50 or more on the index indicates that more builders view conditions as favorable rather than unfavorable.

Access Research & Consulting Inc. estimates that the number of mortgage brokerage firms is down from a peak of 53,000 in 2004 to less than 15,000; this may be a good thing.

Now we can start into the middle of the picture, the harder pieces of the puzzle.

Realty Trac reported January 2010 foreclosures were above 300,000 for the eleventh straight month, and up 15% from January last year. US Home ownership is back down to levels not seen since 2000.

Private mortgage insurance companies are dropping like moths flying into the flames of a blazing fire. Short sales and foreclosures are literally wiping them out.

Mortgage underwriting standards are getting tighter everyday, shrinking the pool of eligible qualified potential home buyers. Even FHA has made it tougher to qualify for a mortgage. This piece is part of the demand side.

By most industry estimates, there are eight million delinquent mortgages in the US today and only a very small percent of the mortgage modifications are actually working. The re-default rate continues to climb. Only 66,000 are considered permanent of 900,000 of those who are enrolled in trial modification programs.

3.4 million Homes in the Treasury Department’s Making Home Ownership Affordable (HAMP) are currently 60 days or more delinquent.

There are a half trillion dollars of mortgages still out there that will reset or adjust over the next twenty four months. Many of these homeowners are not prepared for the higher cost of housing headed their way.

The picture is coming together, but there are still some pieces missing.

The shadow inventory is out there in various forms, and the number of homes sitting vacant is at a historic high. Many are owned by institutions, others are owned by individuals, all are waiting for the market to improve. Then there are the sellers who would like to sell but can not or will not sell at current prices. At some point they will have to liquidate this inventory.

We should all hope Fannie Mae, Freddie Mac, and the others will slowly ease this inventory into the market. Some industry experts believe it could take as long as three years for the market to absorb this shadow inventory of homes.

If they dump a wave or waves of distressed property into the market, it will drive down prices further and create a huge opportunity for those in a position to capitalize on the low prices.

The Federal Reserve’s 1.25 trillion dollar fund set up to buy mortgage backed securities is nearly spent. Without the support of this emergency fund, the secondary mortgage money market is bound to drive rates higher for consumers.

The effect of higher interest rates is to make housing less affordable and reduce the buyer pool, again reducing the demand side.

What the real estate market needs is jobs and time. Jobs will help people stay in the homes they currently own. Jobs will slow foreclosures, help mortgage modifications work, and create new demand.

Time will heal credit, time will clear inventory, and in time the market will find balance again.

Now step back and look close, with all the pieces of the puzzle in place. Where do you think the market will go over the next six months, twelve months, and twenty four months?

Remember Mesquite, Nevada is a prime retirement community with a very bright future offering a low tax structure, excellent weather with nearly constant sunshine, premiere golf courses, excellent outdoor opportunities, gaming and all located within an hour’s drive of Las Vegas.

Chris W. Miller

ERA Brokers Consolidated

Mesquite NV 89027

702- 346-7200

435-862-5951

Mesquite Market

chris@mesquitemarket.com

Lincoln County Land Market

Nevada Ranch Properties

Home Buyers sitting on the Fence Should Know This

Currently FHA has been playing a large role in home mortgage lending. The relatively easy to qualify for and low down payment requirements have made FHA loans attractive to many of today’s home buyers, FHA Does not actually Loan money to home buyers, but insures lenders against default on loans that meet FHA criteria.

Some rules changes are on the way to FHA guidelines. They will include higher upfront insurance premium, current buyers pay 1.75% of the loan amount that will go to 2.25%, that will be the second increase in two years.

The current value of the FHA’s reserves to cover losses has fallen to $3.6 billion, less than.05% of the roughly $680 billion in loans outstanding, down from 3% a year earlier.

In addition the agency may ask for buyers to pay annual premiums. FHA runs a risk of coming up short and may be forced to go to congress to ask for a bail out of its own for the first time in history.

Today only a 3.5% down payment is required on FHA loans. There has been much criticism, that FHA is only prolonging the current crisis, and even creating a new bubble of buyers unable to afford the home they are buying.

There is speculation FHA will increase the required down payment to ten percent, this idea is supported by many housing analysts. As well reducing the amount sellers can contribute to the costs of sale for the buyer from 6% to 3%.

That seller’s contribution has undoubtedly lead to inflated pricing to give the seller the funds to pay the buyers costs. This artificial inflating of prices to allow people to buy homes by paying their down payments and closing costs sounds the reverse of what the market needs right now.

For now Mesquite Nevada real estate home buyers still have USDA financing available, a low down payment program. It could be gone with the 2010 census if we have grown above the 20,000 population mark.

Chris W. Miller has 33 years in the real estate industry, was trained and worked as a financial advisor for Morgan Stanley Dean Witter and currently specializes in Irrigated Nevada land with water rights with ERA Brokers Consolidated in Mesquite Nevada. He can be reached at 702-346-7200 or chris@mesquitemarket.com
Chris W. Miller

Chris W. Miller

ERA Brokers Consolidated

Mesquite NV 89027

702- 346-7200

435-862-5951

Mesquite Market

chris@mesquitemarket.com

Lincoln County Land Market

Nevada Ranch Properties

A lender recently told me, 80% of the buyers he is pre-qualifying can not get a loan.

I have a nagging fear that our real estate markets as we have known them throughout the last 70 years will not be restored until the Federation gets back to its foundation. The nation was built on principles of individual liberty, individual responsibility, and free enterprise. As a democracy we elect officials to represent us, uphold the Constitution, and follow the laws, today they appear to be doing few of these things.

The majority of the money currently being loaned as mortgages is government backed, through FHA, HUD, USDA, VA and in the secondary markets of Fannie Mae, Freddie Mac, Ginnie Mae. Yes a conventional bank or mortgage broker may take your loan application but virtually all the loans are being sold into these government agencies. The private secondary mortgage market has become nearly non existent at current rates. Fannie and Freddie were not designed to be slush funds for bad decisions or funded long term by tax dollars. In order for the Mortgage companies to continue to lend at current rates the US government may have to EXPLICITLY guarantee these agency (MBS) Mortgage backed securities cash flow investments.

The government regulations have gone from “making homes affordable” think: Bush administration, ACORN, and the repeal of Glass-Steagall, although it goes back much further in history. To today’s consumer protection laws, making it much more difficult to get a loan. When the government exits the mortgage business, rates will go up.

The federal reserve has spent 1.122 trillion of the 1.25 trillion given it to buy (MBS), the program is scheduled to end March 2010, along with the “Home Buyers Tax Credits”. The federal reserve can keep rates low for the banks to make huge profits on short rates but it really has limited control of the ten year and longer end of the bond markets which effect mortgage rates more directly.

2.8 million Foreclosures hit the market in 2009. Fitch ratings have warned that in the next twenty four months another one half trillion dollars in prime, Alt-A, interest only, option arms, and sub prime mortgages will adjust or recast and many of these are middle and upper middle class families. Creating unsustainable payment shock for millions more Americans and millions more foreclosures. Distress in real estate tends to lead to more distress, and finding a bottom may involve unemployment numbers.

RealtyTrac says “No End in Sight”.

This is ALL about unsustainable debt, consumer debt, state level debt, federal level debt, and out of control spending.

Back to the start, the Federation is governed by laws; states are required to balance budgets, consumers are required to make mortgage payments or suffer the consequences. Our elected officials can not save home values, they can not keep people living in more home than they can afford, they can not put people in more home than they can afford and expect them to make it, and they can not modify people into a home they could never afford in the first place. They are throwing our good money after trillions in bad money. They, the elected officials, must be held accountable for bringing our children’s nation to the brink of bankruptcy.

When the dust finally settles and the unrealized losses are all on the books, the wealth effect in dollars lost will be staggering beyond any numbers currently being discussed, the effects will last generations. These losses will show up in places like pension funds of all kinds, 401k plans, other retirement accounts, sovereign wealth funds, and many of the world’s governments. States with budget deficits and falling tax revenues will be asked to cover more and more of the federal debt burden.

None of this is good for the current home price market today or tomorrow. The median price home sold in Mesquite during the forth quarter 2009 dropped to $192,063 or $118 per square foot. The median priced condo sold for $75,000 or $70 per square foot, and the median priced town home sold for $108,000 or $78 per square foot.

Ego, greed and monetary policy have taken us down the wrong path. Government intervention and efforts to manipulate the market created the environment for the crisis to occur; now it threatens to prolong and deepen the damage. We as a country must quit spending money we do not have, buying homes we can not afford, and curb government spending programs. And until we as a nation get back to a free and open market, principles of individual liberty, individual responsibility, and free enterprise, I believe recovery is unlikely.

Real recovery can only begin with honesty at every level, at home, in business, and most importantly at the government level. In my humble opinion we have little chance of any real sustainable financial recovery until we accept these facts and principles and then, act on them.

Expect real estate values to continue to drop more in 2010 due to the massive amount of distressed inventory of properties sitting out there and coming to the market.

Chris W. Miller has 33 years in the real estate industry, was trained and worked as a financial advisor for Morgan Stanley Dean Witter and currently specializes in Irrigated Nevada land with water rights with ERA Brokers Consolidated in Mesquite Nevada. He can be reached at 702-346-7200 or chris@mesquitemarket.com
Chris W. Miller

Chris W. Miller

ERA Brokers Consolidated

Mesquite NV 89027

702- 346-7200

435-862-5951

Mesquite Market

chris@mesquitemarket.com

Lincoln County Land Market

Nevada Ranch Properties

In May of 2007 we had no shadow inventory, virtually everything listed was sold including the few foreclosures and banks were not holding them back off the market at that time.

Many questions surround this so called shadow inventory supply of housing; some even dismiss the idea as a scare tactic and illusion. Market facts are as varied as there are markets; many markets that did not experience the extreme boom are relatively healthy while others continue to get sicker. This information is definitely market specific.

Mesquite Nevada real estate statistics since May of 2007 show a steady, dramatic, and continual climb in failed listings. These properties were active for sale and did not sell and are not actively for sale today. Yet the reasons for needing to sell and the needs of seller’s in most cases have not changed. In many cases the urgency to sell has only increased. How many people do you know who have put off putting their home on the market until the market improves and how long can they wait?

Notice of defaults, those falling at least ninety days behind on their mortgage payments has spiked to its highest level in the second half of 2009. Many of these will become short sales or foreclosed bank owned properties. They have to be sold and are not currently listed as active.

Foreclosures and bank owned vacant properties in Mesquite NV continue to climb and the banks are not listing them. They appear to be holding them waiting for either a dramatic market change or more likely a change in government regulations regarding asset values and bank solvency. Realized verses unrealized losses on the books of the banks. They may actually believe they can release these at a pace they can control prices, manipulate the market, I know they have not acted rationally but this would be off the scale of stupid.

Today there are around 400 active listings in the town with a population of 18,000 or so of primarily retirees, at 2 per household that’s around 9000 homes and condos. The shadow inventory is much harder to count. You have normal live changes that lead to people moving, health, death, jobs, family size changes, etc.

When you add in the mortgage loan resets, those arm loan adjustments where the payments increase, the walk a ways from the under water syndrome, moral or not, it is becoming far more common, and the very high unemployment. Mesquite NV real estate is unique in that most of the people living here purchased either at the beginning of the boom or during and so nearly all paid more than they can net from selling today. Under water whether by mortgage or just cash loss.

Based on vacancy rates, notices of defaults, Mesquite’s foreclosure filings, 400 active listings, builders inventories not listed, there may be as many 800 or 900 properties coming available. 2009 was a descent year for number of sales, MLS shows 365 closed as of December 31, 2009 for the year. It was not so good for prices the average sold price was $110 per square foot. That number dropped to $89 per foot in December 2009.

At the absorption rate of 365 per year, it could take until 2012 just to clear the inventory sitting out there today. This of course does not consider new builder competition, which with Sun City in town and plenty of new choices coming soon in Canyon Crest, is going to remain fierce. Supply and demand will dictate pricing.

I believe there is another possibly more important factor driving demand. During the boom years the emphases was “A Rich Rewarding Lifestyle”, “The Next Palm Springs” was often heard around the city halls. Many larger and expensive homes were built. The bulk of the market selling to today is the lower end smaller more efficient homes. Expensive gated HOAs and the higher end housing sector is really being hit hard on pricing. The 2009 Median price for all housing sold and closed in Mesquite, NV was $165,000. If you are builder there is a target number for you.

The retirees of tomorrow are focused on preservation of capital, conservation, comfort, and affordability. Few are going to extend themselves beyond their budgets, and most will try to stay in a comfort zone which will allow for more than living month to month just making house payments. The days of Baby Boomer’s spending like they are the wealthy class may be gone forever. Bankruptcies have shot through the roof and will continue to go up well into 2010.

Mesquite Nevada’s real estate challenge ahead will involve working our way out the hole we currently in, and that could take two to three years. Most importantly though Mesquite’s challenge will be to bring a product to the market in the future that will meet the needs of this retiring generation. Affordable housing must top the list of priorities (think $110 per square foot), solar orientation, efficiency, comfort and livability.

Some may say that Mesquite was built by the wealthy for the wealthy and must remain that way; I say if that be the case it is going to become a mighty lonely place around here.

Chris W. Miller

ERA Brokers Consolidated

Mesquite NV 89027

702- 346-7200

435-862-5951

Mesquite Market

chris@mesquitemarket.com

Lincoln County Land Market

Nevada Ranch Properties

There are currently only 12 active commercial buildings listed in the Mesquite MLS, and only 18 commercial land parcels listed active for sale in the Mesquite MLS. Commercial real estate is listed and generalized into these two categories in the Mesquite MLS. I have focused on the improvements, not the vacant land and attempted to break it down for you by highest and best use. There are some properties that do fall into more than one category.

After a careful physical review it appears that there are closer to 30 buildings available for sale or lease, and 45 commercial land parcels for sale or with an option to lease with build to suit in some cases.

Business closings have been dramatic over the past twenty four months, in the neighborhood of 30 have closed and are gone, including a large casino, numerous restaurants, retail shops, builders, associated contractors, suppliers, title companies, and various other small businesses.

In general, in retail space the vacancy rates range from 100% to as little as 20% per complex, virtually none are 100% occupied. The overall vacancy rate in Mesquite for retail space appears to be running between 40 to 50% of available space. There are between 50 and 70 vacant retail spaces, depending on space size. A vacant 8000 square foot building could count as one space or four units. I would guess there is between 100,000 and 120,000 square feet of idle retail space in the market.

Light industrial space may be worse than retail space in terms of vacancy rates, at least nine buildings are 100% vacant with close to 125,000 square feet of idle space. Then there are another ten to twelve buildings with some vacancy. My best guess is these have another 30,000 to 50,000 feet of idle unoccupied space. There may be as much as 175,000 square feet of vacant light industrial space.

Falcon Mesa Business Park Complex, this complex is a combination of office and retail multi purpose use. Seven of 13 of the total buildings appear to be vacant. When a building was half occupied, I have counted that as half and included these buildings in the above mentioned vacant retail square footage.

The Town and Country Plaza on Pioneer Blvd. has seven tenants, all retail except AG Edwards which is the only office space leased. These early tenants are paying close to $1.50 per foot, but I believe that future new tenants may get a better rate. My best guess is that it is 20% retail and 5% office space occupied. The owner is motivated and very negotiable but will not commit to any numbers without a face to face meeting with the prospect.

The Oasis Professional Office Park at Pinnacle and Oasis Blvd has eleven buildings total and 6 appear to be vacant and for sale or lease. The Brickyard on Mesquite Blvd appears to have ten vacant spaces out of a total of approximately 30.

The 100% vacant buildings in Mesquite include, 175 and 195 Willis Carrier Canyon (40,000 Sq. Ft each), Capital Materials Building 6200 Sq. Ft on 2.58 acres with yard and pole barns, two buildings located in front of Capital Materials Buildings, Calais clubhouse building, office building located in front of Calais clubhouse, Cinco Office building at 4200 Sq. Ft., Harley’s Auto Repair shop on Mesquite Blvd, Rio Virgin Grill Restaurant, Credit Union building on Pioneer in front of Wal-Mart, Walgreen’s Building on corner of Falcon Ridge and Pioneer, Buffalos Restaurant, Wolf Creek Office Building, Convention Center Building, NAPA auto building on Mesquite Blvd, 6000 warehouse on Aztec, 4800 tilt up building at corner of Hardy Way and Bowler, a Building East of Sears. There are a few others but this gives you a sense of the magnitude.

There is vacancy in every commercial complex and as I talked to leasing agents and building owners there was one clear theme, they are begging for people who will pay $1 to $1.50 per foot. They all offer possible tenant improvements with two to five year leases. They hint at possible lower rates, but when pressed, the lowest offer I got was a possible .50 per foot from an agent who would have to ask and see. Many of these buildings have no tenant improvements and have been vacant for over two years.

If building owners are giving away expensive tenant improvements, free months rent, paying taxes, insurance, and CAM fees, then the net is far less than current asking rents.

We have not really seen price reductions in asking prices or lease rates. The owners continue to hire agents who are inexperienced with little or no commercial background who will tell the owners only what they want to hear. I would liken it to taking a dangerous river rafting trip with a guide who knows less about rafting, the river and current conditions than you do, risky at best. They list property with no facts to support prices and at reduced commission rates, most CCIM or experienced commercial agents basically refuse to waste their time with amateur agents and over priced properties.

Appraisers call me frequently looking for comps and since there are no comps in over two years I suggest they use a capitalization approach. Of course that leads to a fair market rents discussion. In my opinion, over the next few years until Mesquite grows into the supply .40 to .60 cents a foot will be the going rate. At an 8% cap rate and .50 cents a foot the average asking price is on average about twice the actual market value. Of course the owners and listing agents are sure this approach makes no sense at all.

There is much speculation in the market about the potential effects of the Desert Falls Sports Complex; it is being used by many as justification for future values. It remains to be seen if it will ever materialize. Until it does I would say “What you see is what you get”

Chris W. Miller

ERA Brokers Consolidated

Mesquite NV 89027

702- 346-7200

435-862-5951

Mesquite Market

chris@mesquitemarket.com

Lincoln County Land Market

Nevada Ranch Properties

When the well runs dry
Las Vegas depends on Lake Mead, the Colorado River for its water supply. So do the other six states that are parties to theColorado River Pact of 1922. California grows much of the produce you eat.

The Ogallala has been over drafted for the last 60 years and it will not last forever. From the North Plains District,
The Ogallala Aquifer within the boundaries of the North Plains Groundwater Conservation District is declining at an average of 1.74 feet per year (1,082,631 acre ft). Could the well run dry and if so what next?
Can they conserve and save it?

The Memphis Alluvial along the Mississippi River is being over drafted to the extreme in places, who would have thought this part of the country would have water issues.

Washington State certainly gets plenty of rain how could they have water problems? Yet
Washington State has an aquifer in trouble.

While they argue about global warming at the Copenhagen Global Warming conference and the politicians figure out cap and tax, our ground water,
our aquifers, are in trouble all over the country.

Water rights in Nevada are owned as an appurtenance to the land.

If you would like to learn more about Nevada Ranch land and Nevada’s Irrigated Farm land market,

Chris W. Miller specializes in this area of the real estate business, this is a specialized Business.

Dedicated Land Professionals with the Answers You Need.

Nevada Land opportunities in Irrigated Farm and Ranch Land with Water Rights.

Water Rights For Sale on Irrigated Nevada Farms and Ranch Land

1200 Acre Ranch with Live springs and Water Rights

4.5 sections, 17 Wells, 18 Pivots Irrigated Farm

2000 Acres Irrigated, 10 Wells, Nice Nevada Farm Land

1000 Deeded, 33,479 Acre Grazing Lease Cattle Ranch With Water Rights

266 Acres, 821 Acre Feet of Ground Water Rights, BLM Grazing Leases

These are a sampling of the types of Nevada Ranch properties available. For more information on Nevada Farm and Ranch Land Call Chris

Chris W. Miller

ERA Brokers Consolidated

Mesquite NV 89027

702- 346-7200

435-862-5951

Mesquite Market

chris@mesquitemarket.com

Lincoln County Land Market

Nevada Ranch Properties

Nevada Ranches and Farms, in general own their water rights. These water rights are sold as an appurtenance to the land.

Land in Nevada without water can be desolate. Most every Nevada Ranch and Farm has water rights. For more information on Nevada water rights the Nevada State Engineers office is your best bet. The State Engineers office regulates and controls water rights in Nevada.

Water rights being sold with Nevada farms and ranches may be for irrigation, livestock watering, or domestic use. It may come from live springs, artesian wells or be pumped ground water. Regardless the use or source, they must have have water rights to utilize that water. Some Nevada ranches own water rights located on public lands and have BLM grazing leases.

A single household can use a domestic well without any special rights. Nevada ranch property and farms need certified water rights.

Water in Nevada is scarce, a valuable resource to be protected and managed. Fresh water around the world is becoming a coveted commodity.  Nevada’s Irrigated Farms and Ranch land with water rights provide food for the world, and jobs as well as a quality lifestyle for those who operate them.

Since the State of Nevada has more public land than any other in the lower 48, privately owned Nevada Farms and Ranches tend to be few and far between. Again land in Nevada without water tends to be rather barren.

The State of Nevada is divided into water basins, many basins are closed to any future allocations. They will not issue additional permits in these areas to use the water resources. While demand increases, supply is very limited.

If you would like to learn more about Nevada Ranch land and Nevada’s Irrigated Farm land market,

Chris W. Miller specializes in this area of the real estate business, this is a specialized Business.

Dedicated Land Professionals with the Answers You Need.

Nevada Land opportunities in Irrigated Farm and Ranch Land with Water Rights.

 Land in Nevada Blog 

Water Rights For Sale on Irrigated Nevada Farms and Ranch Land

 1200 Acre Ranch with Live springs and Water Rights 

 4.5 sections, 17 Wells, 18 Pivots Irrigated Farm

2000 Acres Irrigated, 10 Wells, Nice Nevada Farm Land

1000 Deeded, 33,479 Acre Grazing Lease Cattle Ranch With Water Rights

266 Acres, 821 Acre Feet of Ground Water Rights, BLM Grazing Leases

These are a sampling of the types of Nevada Ranch properties available. For more information on Nevada Farm and Ranch Land Call Chris

Chris W. Miller

ERA Brokers Consolidated

Mesquite NV  89027

702- 346-7200

435-862-5951

Mesquite Market

chris@mesquitemarket.com

Lincoln County Land Market

Nevada Ranch Properties

First time home buyers, not really first time, just not in the past three years, home buyers tax credit “free money”, likely to be extended even expanded. They are raising the income level for those who qualify to expand the program.

A generation of people of the United States is willing to tap into, possibly bankrupt their grand children’s financial future to prop up the value of their own assets, their homes. We as a society seem to continue to refuse to accept responsibility for the housing bubble.

First time home buyers tax credit of $8,000 will be extended and most likely expanded in a desperate attempt to put a floor under home prices. Those dollars they are printing and handing out will have to be paid back by the children of today and tomorrow.

You hear plenty of grumbling about government spending and waste. Many people complain about bank bailouts and stimulus frivolous programs. Washington DC is fighting to prevent private corporations from paying top executives too much in compensation.

It seems all you hear these days is how much money the current administration is spending and wasting. They now own banks, auto companies, and some insurance companies.

Yet when it comes to individuals and their own home values anything goes. If it will save the price of my home from falling further, then go for it. Extend those credits, give that money away. Greed at its most despicable level, at the expense of our children.

For the most part improved sales have only been at the lower end of the price ranges. The mid and upper range home values continue to fall. What most consumers pushing to extend these credits do not seem to understand is that we are pulling sales from next year, extending the pain.

The other growing issue is the fact that most of the mortgages being made to people receiving these tax credits, and I will say it again “free money from the government”

are high loan to value government guaranteed loans. The buyers have almost none of their own money in the game, no equity. No reason to stick around if the going gets rough.

The market values went up because of this type of funny money and mindless speculation. We are now going to use our children’s future hard earned tax dollars to protect those values based in our own mistakes and greed. We should be ashamed.  

Chris W. Miller

ERA Brokers Consolidated

Mesquite NV  89027

702- 346-7200

435-862-5951

Mesquite Market

chris@mesquitemarket.com

Lincoln County Land Market

Nevada Ranch Properties

When most people think of farm land and ranch property, they think open ranges, hay fields, cattle and cowboys riding horses.

Wall Street seems like a far off place in another world. A fast paced place driven by profit and greed.

It seems the classic contradiction, slower paced, straight talking, down to earth folks making their living off the land verses the Bernie Madoff and George Soros types.

Truth is, the story I am about to tell you just may be a little sad, because Wall Street is buying up the farm. Over the past few years investment power houses like BlackRock, and retirement plan giants like TIAA-CREF has been plowing money into farmland. In Nevada farm land generally means land with water rights, due to the arid climate.

These are smart people who are motivated by money and profit.

Here is the deal; the fundamentals are in place for a long term boom in prices for everything AG-related. Consider this; in 1960 there were 1.1 acres of arable farmland per person globally, according to data from the United Nations. By 2000 that number had fallen to .6 acres. Over the next 40 years the world population is projected to grow from 6 billion to 9 billion.

According to Joachim von Braun, director general of the International Food Policy Research Institute, “Land is scarce and will become scarcer as the world has to double food output to satisfy increased demand by 2050”. “With limited land and water resources, this will automatically lead to increased valuations of productive land.” Von Braun goes on to say, “It goes hand in hand with water, Water scarcity will probably increase even more than land.”

Water in Nevada is today in short supply and clearly demand will outpace supply as they continue to close basins to new permits. Water rights in Nevada have another issue facing the dwindling supply, the demographic shift of the baby boomers to the more tax favorable warmer climate. Choices, decisions, are being made today, do we use the water for agriculture and food production, or do we pipe to Las Vegas for culinary use.

Farmers and ranchers want to stay in the business, but millions of dollars waved under their noses make it tough to say no to the sale. Many will stay on and lease to continue to live the lifestyle they love. These lease payments are cash flow on the investments. Could it be a win-win situation?

Commodities guru Jim Rogers says, “I’m convinced that farmland is going to be one of the best investments of our time.” 

Meanwhile, B.L. Harris, acting director of the Texas Water Resource Institute, knows well the problems of the Ogallala system. “The one big issue with regard to the Ogallala is the fact that the annual recharge is much, much lower than the extraction rate that we are putting on the aquifer at the present time. The aquifer is over-drafted to a substantial extent.” The Ogallala is one of the world’s largest aquifers covering 174,000 square miles; it runs from South Dakota to Texas. Some estimates say it will dry up in as little as 25 years.

Farmers are smart and they talk, they may wear overalls and talk funny, but farming is older than Wall Street. Water and food are the sources of life for the planet, demand is guaranteed to grow. There are few guarantees on Wall Street. Farming is a difficult business, but it is a fine tuned machine, executed right it is a profit opportunity.

Chris W. Miller is Nevada irrigated farm and ranch land specialist with ERA Brokers Consolidated. Chris has Nevada farms as small as 266 acres with ground water rights, to Nevada cattle ranches as large as 34,000 acres including rangeland leases, listed and available for sale. For information about Nevada farm and ranch land with water rights call Chris today 702-346-7200 or 435-862-5951

Chris W. Miller

ERA Brokers Consolidated

Mesquite NV  89027

702- 346-7200

435-862-5951

Mesquite Market

chris@mesquitemarket.com

Lincoln County Land Market

Nevada Ranch Properties

Fortune magazine, June 22, 2009 issue has a good article on “Why Farm Land is Hot”. Why ETF’s are investing today for the long haul on the food and water shortages in our future. From 1960 to 2000 the world went from over one acre of arable land per person to just over a half acre of arable land per person.

Growing populations and the shrinking supply of arable land will be a key focus of humanity as millions starve in the not too distant future. Water in many locations is the key to food production.

Water rights in Nevada are our most valuable resource. Irrigated agricultural land is available and the prices are increasing. Many basins in Nevada are closed to any future additional water rights; the supply side is very limited and will not increase. While demand continues to grow, with or without future housing developments.

We have cattle ranches with live springs filling stock tanks to water the cattle, and the ranch owns those water rights. We have sections of land with irrigation pivots watering grains like wheat and barley, as well as potatoes, and alfalfa. These irrigation pivots are fed from wells on the land and the farmers own those water rights.

Many farmers are willing to pay handsome lease payments to farm this ground, offering good rates of return to investors. You can own a half full strip mall with falling rents and potential future higher vacancy rates, or farm land with water rights.

If you have the means and are still not sure of the future demand, check out what the executives from some the nation’s largest agricultural companies have to say about the future demand.

Chris W. Miller

ERA Brokers Consolidated

Mesquite NV  89027

702- 346-7200

435-862-5951

Mesquite Market

chris@mesquitemarket.com

Lincoln County Land Market

Nevada Ranch Properties