Buying, selling and investing in large acreage can be very exciting and rewarding. There are three inherent advantages to owning large tracts of land, as opposed to smaller lots.
- First, there is almost an unlimited supply of small lots available for purchase, whilelarge tracts of land are a much rarer commodity.
- Second, it is very difficult to subdivide a small lot, while large tracts usually can be parceled into smaller parcels, automatically increasing the per-acre price.
- Third, in order for a small lot to increase in value, there has to be greater demand for usage, while large acreage can increase in value simply as the result of ongoing and inevitable inflation.
In the year 1930, the Dow Jones was 294, and a person could have purchased large tracts of land all over the Western United States for $2 per acre. Today, the Dow Jones is approximately 11,000, representing a value 37 times higher than it was 80 years ago. Yet it would be very difficult today to find land for sale anywhere in the United States for less than $200 per acre, representing a value 100 times higher than it was 80 years ago.
There is another important factor at work here that should not be overlooked. The Dow Jones is a group of companies, but in 1930 there were many individual firms that failed, went bankrupt, or were liquidated and no longer exist. However, every single acre of land that existed in the United States of America in 1930 is still here today and is worth considerably more money.
In order for stocks to increase in value, there has to be ongoing positive performance and greater earnings. Large acreage, however, will gain value simply as the result of inflation and population increase, both of which are inevitable in future years.
According to the U. S. Bureau of Labor Statistics, it took $6,536 in 2010 to purchase the same goods and services that $500 purchased in 1930. That means inflation caused the dollar to lose 92% of its purchasing power over the last 80 years. The population of the United States in 1930 was 127 million people; today it is 317 million and is projected to exceed 400 million by 2040.In the future, if inflation continues as it has since the founding of the nation; if the population continues to increase as it has since the founding of the nation; and if no one figures out how to make more land –then the only conclusion is that the finite supply of large acreage has to increase in value in future years!
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