Seth: Hey, everyone. How's it going? This is Seth Williams and Neil Clements. You're listening to the REtipster podcast.

We're back here today with another market update for January 2025. The last time we did this as a little bit of an experiment, it went really well. A lot of people seemed to like it. I heard from more people than I can remember who said, "I love this. I want to hear more. This is really helpful." So Neil spent some time putting together some analysis of the market and different things he's seeing out there so we would have some nice meaty stuff to dig into today.

So Neil, welcome. How's it going?

Neil: Awesome, Seth. Thanks for having me again. Always a blessing to be here.

Let's hop into it. Let's talk about the end of 2024 going into 2025. I'm especially excited to just go through this. I'm not going to give a ton of predictions, but I'm going to talk about some statistics that impact land investors and housing investors. It's going to be some pretty interesting stuff, so stay tuned. It'll be a good time today.

Let's talk about Q4 of last year, and let's talk about what we were experiencing and maybe even go back to Q3. When we look at 2024, I think we could all agree, and everybody listening would probably nod their head yes, that 2024 was a very difficult year for land investors. Even in the last video we did, I said that my mission with these videos was to educate our community and educate our land investors so that we don't go out and make some huge mistakes. I mentioned that all the time I saw in the forums and posts and Facebook groups that there were just a lot of people exiting the business. I really don't want that to happen anymore.

I think that if people were more in tune with the market and what's going on, if they knew that the shift was going to happen in Q3 and Q4 last year where the market almost tanked... Really, the reason that happened is just that interest rates caught up with us over time. You can't go from rates of say 4% or 5% for land and then escalate it to 9% or 10% like bank rates in the course of six months, which happened in late 2022. You can't have that happen and then not eventually feel the effects of it.

The interesting thing about 2024 is we finally felt the effects and the lag, almost like a hangover per se—the 2022 hangover going into 2024. But I'll tell you what happened after the election—and whether you like the candidate who won or not—after the election, my business blew up in a huge way. The mastermind group that you set up that I'm a part of, Seth, blew up in a huge way. All of their businesses were selling properties left and right.

I had inventory on the market for over a year in a pretty rural area that all of a sudden had multiple offers and multiple lots in the subdivision that I sold. We sold almost every single property we had listed. We had quite a few—about 10 or 15 properties listed—and we sold almost everything.

This shouldn't necessarily be a surprise, but it's almost like you have the hangover of the interest rates that finally hit in late 2024. You had the uncertainty of the election where people—from sellers to buyers—everybody was just telling us, "We're just waiting until after the election." And the crazy thing is, not a week later after the election, all of our businesses blew up, especially on the disposition side.

It's just pretty crazy how what people believe and what people think about a market becomes the actual market. It's a really interesting phenomenon. We've got to pay attention to the news. We've got to pay attention to—dare I say—propaganda being pushed out at times. We've got to pay attention to the way that people think, because the way that people think is the way that they act. I think that's what we experienced in late 2024. But December came back like a rocket ship. There's no other way I can explain it. It was awesome.

Seth: On that note, I'm wondering, what if somebody's business did not blow up in a good way after the election? Does that just mean they're doing something wrong? Or could it be that maybe they're in some market that, for some reason, isn't as affected by that?

I'm just curious about that in case somebody out there is listening and thinking, "Hey, what about me? I haven't seen that."

Neil: Is it possible? Of course it's possible. However, just the five guys in my mastermind group—all doing multimillion-dollar businesses, really big guys investing all over the country, probably 10 different states, different acreage ranges, infill, rural, you name it—everybody was like, "Heck yes, my business blew up."

So is it possible that someone's business didn't blow up? And I'm specifically talking about dispositions here—selling. Yes, it's possible.

Yet I'd also say, look at your marketing; make sure it was marketed fully, because we experienced just a wave of buyers—a huge wave of buyers. This was from the week of Thanksgiving and after, through most of December. And we're recording this in early January right now, and I'm experiencing another wave this week as well. Just in the last few days, my phone has not stopped ringing for the properties we have listed. This was after the new year. It's just really interesting.

If we knew market statistics, whether it's housing or land, that's kind of to be expected. That's what happens in an election year. The other thing to remember that I think is helpful is that market demand is elastic, meaning it bounces back. For instance, in late 2024, a lot of people didn't buy. In December, after the first or second week, you get into Christmas and New Year's, and a lot of people aren't buying during that time.

But this demand bounces back. It's not like people don't have life events anymore—they get divorced, they get married, they have kids, somebody dies, etc. The life events still happen. And so this demand that has been pent up for, say, these last two years since the market changed is going to come back. I'm really hopeful that that's what 2025 looks like. We'll get into interest rates and some other stuff like that here in a little bit.

Seth: You mentioned earlier how you're seeing people exit the business and you don't want that to happen. Is that necessarily a bad thing? Like, if somebody wants to just get out of this, should we let them?

I'm almost thinking about people who are really serious about this and want it to work and they're doing things right, versus other people who are kind of just playing around with the business and they're not making very good offers and kind of just messing things up. What if it's just fine for the wrong people to get out of the business?

Neil: It is. Is it a bad thing? It's a bad thing for the people who exited, who no longer have the opportunity, or who maybe failed and spent savings or their life savings trying to do this business.

I want nobody to fail. However, is it going to happen? Absolutely, it is. And is it a good thing for those who are still in business? Absolutely, it is.

When you look back at some of the biggest businesses in the world, from Apple to Amazon—an article I read last night was saying that some of these biggest businesses in the whole world were started during a depressionary phase or recessionary phase. And so when the business gets tough is when all of your competition exits, and that's when you can go out and innovate and take market share.

So it's a fantastic thing that people are failing and getting out of the business for the people who survive. It's an awful thing for people who get out of the business and no longer have the opportunity, yet it does happen.

I also saw some house flipping data out there that in Q3 of '24 and going into Q4, the house flipping profits and spreads between purchase price and sales price were at the lowest they've been in like two decades. I would imagine that's the same for land investors as it is for house investors. There's just not as much data in our industry.

Seth: We ran a poll in our Facebook group; I think it was back in November-December, and 263 people responded to it at the time of this recording. It was really interesting.

The question was asking, if we were to talk about three to five states giving relevant stats, economic data, showing trends, giving future predictions, that kind of thing, which states people would want to hear about? People were allowed to vote multiple times if they wanted to.

The top five states in this order were: Texas was number one, North Carolina was number two, Florida was number three, Tennessee was number four, and Georgia was number five. And then Colorado, Arizona was in there, New Mexico... and then it just kind of went down after that.

But I thought it was really interesting because some of these states didn't surprise me at all, like Texas and Florida. But I was surprised that North Carolina was number two. Like, it was way up there. In a way, I don't know if this is necessarily a good measurement for like, "This is where all the land investors are," but if that many people want to hear about this, it's kind of an interesting indicator.

Tell us about the whole migration thing, why those states have been hot and what's going on now with all that.

Neil: It's really interesting when you look at land markets and migration, especially the poll that we did. It was ironic—I saw somebody post something in the REtipster Facebook group that was along the lines of the largest net domestic migration. And if that was you, shout out. I don't remember who it was, but shout out to whoever posted it. Very good post.

I texted Seth that same day and said, "Seth, you've got to look at this." The exact same states that people were saying they wanted to hear about from us and these land market insights and updates are the exact same counties that had the largest net domestic migration gains from 2020 to 2023.

I was mind-blown. Actually, I mean, it shouldn't have been—it should have been common sense to me. But it was the exact same counties, like no variation at all.

And so what does that tell us? Well, that tells us that people are following the trends, whether they like to know it or not. Some of the hottest land markets in the country are the markets that have the largest domestic migration gains.

Now, the interesting thing is that at the point we're at now, January 2025, we've actually been outside of the COVID market just as long as we were in it. I think a lot of people don't realize that because I believe that probably a lot of our audience here started—I started house flipping during COVID, then moved to land flipping a little bit later. But I would bet that a lot of people started in the up market, and a lot of land investors have not experienced a down market like we've had this past year, which is why they shuffled out of business like we talked about.

But this migration is not happening anymore. In fact, there's one economist out there who is now calling this the "Great Stay," where previously people were in the "Great Migration" from 2020 to about the end of 2022, when everything was hot, money was plentiful, jobs were remote, people were going rural and not urban—all of that was happening.

And when we look at late 2022 up until now, the backside of this, that we've been out of COVID, this migration has almost stopped. Now we have a lot of immigration coming in from foreigners; we know that from the southern border. So that's also influencing some of our land markets here, especially in Texas.

But when we look at migration and migration patterns, a lot of these areas had slowdowns, especially Texas, North Carolina, South Carolina, Georgia, Tennessee, and Florida—all of these places that we're looking at with the big migration gains in the COVID era. Now, post-COVID era, people aren't moving there anymore. And this is not only impacting the land market; it's also impacting the house market.

The really interesting thing when you look at supply, just specifically on housing, is that there's a lot more data available for it; in these areas that were incredibly hot, they are now growing in inventory. We'll talk about a highlight of one of the markets later today, but it's now growing in inventory and growing in inventory drastically, so much so that some of the housing side is actually decreasing in value.

Not seeing that in land yet, but some of the hottest markets are just now oversupplied because we don't have the migration going there to be able to absorb all the housing. And if housing is affected, eventually land will be affected. That's kind of my fear.

So we'll have to see what happens in 2025 to see how that goes. So we'll have to see what happens in 2025 to see how that goes. But really, really interesting in maybe even somebody's potential strategies, where to invest should follow migration. And there's a lot of different ways to look at that.

Seth: You said if housing is affected, land is affected. Could it ever be the other way around, where land is actually going to be affected first because it's less of a priority? Like, people don't need it to live, whereas housing is like, we need that. Like, does it go one way or the other in different scenarios?

Neil: That's a really good question. I mean, I'll give you my theory. This is not based on a ton of research, but my theory is—and what I've seen from at least looking at the Texas market where I primarily focus on—if you look back at the previous several recessions, like all the way back to 1970 or so, you tend to see that the housing market suffers first, and then the land market tends to follow what the housing market does.

Now, the land market tends to be a little bit more extreme in some circumstances, especially in a really deep recession or depression. However, there are times that the land market stayed really resilient. But I didn't see a circumstance—now this is Texas—but I did not see a circumstance where the land led us in and then housing followed. It almost always was housing first and then land followed.

Now, this is one market in the country. There are, I'm sure, examples of the opposite. But my theory on that is, when you think about land, like you said, it's non-owner occupied in most circumstances, yet it also doesn't have a loan in most circumstances. And so if the land values fall 10, 20, 30 percent, sure, it's a big deal, but it's not the end of the world because they most likely don't have a loan and their property taxes in a lot of areas are ag-exempt so they're paying like 100 bucks a year.

With housing, you most likely have a loan; most likely put 3% to 5% down. And if the market turns, you're upside down. And so therefore, foreclosures start happening, inventory gains start coming, and then the market prices slide down. So very different market dynamics. That's why I think the land market just tends to hold on a little bit longer than housing.

I saw a video about a megapolis? I don't know if I said that term right…

Seth: Megalopolis? Several cities, like a whole region of the country?

Neil: Correct. And so if you pull up a map of net domestic migration by county, there's a lot of people out there who have put together these kinds of maps. I'm looking at one right now.

If you look at Florida, it's almost like all of Florida down in the bottom section—it's like, wow, that's a lot of migration. That's kind of one megalopolis. Then you've got Tennessee, North Carolina, South Carolina, North Georgia, and North Alabama—just this huge density map of migration. Then you've got the Texas Triangle. And you look at all the places that people want to be. That's where people are migrating. That's where people are going.

And so I think that a lot of investors have had the thought—me included—it's like, why would we go to these land markets and buy like desert squares where there's hardly any demand? I mean, sure, we can get properties cheap, but then we have to sell them cheap. Why don't we go to these megalopolises, invest in them, and have the wind behind our backs of people coming in and buying?

And I think that's why we saw the COVID explosion of land investing everywhere, from land investing education to buyers to sellers. The market was just flowing.

But now that we don't have that same migration, we've got to button up our businesses. Things are getting harder and we can't expect the migration that we had in the past to bail us out of bad purchases. We have to make good purchases at deep discounts. We've got to be able to sell them to a ready, willing, and able buyer.

Seth: Yeah, that whole—I don't know how you'd get the data on this—but the way that migration affects the land business... I can totally see the direct correlation between that and the house business because people are literally moving themselves to live somewhere else. But with land, people buy land all the time in other states just because, you know? That's not why everybody buys land. Some people are buying to build.

But I'm curious—and I know you probably don't have an answer for me—but it would be interesting to see, like, of all the land that is bought and sold nationwide, how much of that land is immediately built upon thereafter? And what percentage of that land has an owner that lives within a one-hour drive? Just that kind of thing.

Because it'd be interesting to see if people really are staying put and not migrating or moving around the country anymore, what percentage of this land-buying activity will continue happening anyway just because people buy land just because.

Neil: I'll answer that question a little bit later when we go into the market stats, and I'll show you exactly what's happening and how COVID affected that. So that's a really good question.

Seth: Interest rates always play a role in this stuff. And we kind of debated about whether or not to even talk about interest rates because interest rates could change again between the time we're recording this and when it goes live. The Fed cut interest rates in December. Are there any indicators or any clues about if it's going to stay low, go lower, or go up?

Neil: Yeah, really good question. Interest rates are impossible to predict. Even the best guys in the industry, their spreads on predictions are like a point up and down or a full percent up and down. So you really never know where they're going.

However, what we can rely upon to some extent is what Jerome Powell and the Fed say at their meetings. Because they try to give us a forewarning on what they're at least thinking. Now, they don't always follow that. But if they don't follow it, then they tend to crash markets. So they try to follow it as much as humanly possible.

We got another quarter point decrease—and a quarter point, you know, quarter of a percentage—that's significant because at the meeting when Jerome Powell was giving his thoughts and everything like that on the Fed meeting, originally it was projected that we would get the quarter point decrease, which we did. It was also projected that we would be quite a bit lower, you know, a point or two next year as well to get it even lower.

The thing to note about interest rates—and we've talked about this before—but when we look at the federal funds rate, it actually directly impacts land loans because most banks hold the loans in-house and that's what they use to dictate their loans. Fed funds rate plus a margin, also called the Wall Street Journal prime. That's what most people lend upon is prime plus one, prime, prime minus one, et cetera.

And so as land investors, if we follow the Fed funds rate, we can basically know what our buyers are going to get if they get a loan from a bank, which is good news. Because the inverse of that, or not inverse, but the other side of it is when you look at housing rates, mortgage rates, they follow a 10-year Treasury bond. And so rates went down a quarter point for land, but rates rose almost a half percentage to a full percentage for housing in the same day.

So it's like, how does that happen? And for those of you who don't know that happened, we got to pay attention to this stuff. So how did that happen? Because why would rates fall in this and rise here?

Well, the rates for mortgages or for houses depend more upon the 10-year Treasury. And it depends more upon the predictions of where the housing market is going and the investors' yields—what they're willing to accept. Before this meeting, they expected the rates to be a lot lower next year. But Jerome Powell essentially told us that they're not going to fall as much as we thought they were going to fall. And that's because inflation is no longer cooling like we thought it was going to cool.

And so the whole Fed's fight against inflation, in addition to that, the Fed is concerned that Trump's tariffs that he says he's going to implement will cause inflation. So it's kind of a two-edged sword. And whether you believe it's political or you believe it's in the best interest of our country or whatever, the Fed is telling us that they're not going to decrease rates like they thought they were, or like they previously told us they were.

And so over this next year, the rates are not going to probably lower much. So what does that mean for us and land? Well, it means for us that we might not have the explosion in 2025 that a lot of people thought we would have.

Now, I'd love to be wrong. Don't get me wrong. I would love for us to have an inflation explosion and properties inflate like crazy. At the same time, it does appear that they are still very, very hesitant to reduce rates to the levels that they were predicting and talking about all of next year.

And so how does that impact us? Well, we just need to be prepared for next year. If you've been watching a podcast about housing or land or rates or anything in the past, you need to stay up to date on this stuff because it's not going to be as great as we potentially thought it would be.

Seth: And just kind of understanding the macroeconomic, how this all works together, the idea behind tariffs, it's for imports, stuff that we would be getting from manufacturers in China and around the world and that kind of thing. We're basically going to tax anything that we're buying from those countries as kind of an incentive to buy from manufacturers in the U.S. rather than around the world. So there's that end of it.

But the flip side of the coin is it makes stuff expensive, not only to buy from other countries, but it kind of contributes to inflation as well, right? Just because costs of things are going up, whereas they used to be less expensive. And the Fed is trying to counter inflation. They're going to be doing that by raising rates.

So it's that balancing act between is this a free market where things can just fall where they may and prices can figure themselves out? Or is the government going to intervene and force prices to be a certain way for the benefit of a certain group? Am I on the right track or would you disagree with any of that?

Neil: You're absolutely on the right track. Tariffs cause inflation because they raise prices. If you think you won't be impacted by tariffs or pay more money because of it, you're wrong. It is going to impact you because think about all the things we get from China, from India, from all these countries, and we get them relatively cheaply now.

Tariffs essentially help U.S. companies compete with these overseas manufacturing companies. And while it does beef up the U.S. economy, it also inflates things. That's why the Fed wants to see the impact of those tariffs, and if they even get implemented—who knows what will happen? But the Fed wants to see that and see that data come through before making any decisions.

And so what does that mean? What's the net effect of the Fed meeting? The net effect is "higher for longer," which is personally something that I did not want to see. However, that's the reality.

Seth: Yeah. I remember seeing an article like a month or so ago talking about tariffs and how certain things that you might want to buy in the next year that are coming from overseas, like for example, a new computer or something—the same computer could cost 300 to 500 bucks more at this time next year, if these tariffs are in place. So if you need one, buy it now, because it's going to be a lot more expensive.

And this is, again, if the tariffs happen, which I don't know. I mean, politicians say one thing and they don't always end up doing it. But anyway, that's just some of the stuff that's going on that ultimately contributes to interest rates, which ultimately affects land investors.

Neil: Correct. So let's talk about 2025. Let's talk about all the "crash bros" out there that are saying that our market is just going to absolutely crash. The first thing I'll preface with is that I'm hoping that we have paid the price of the interest rates.

And what I mean by that is you don't go through from, say, like 2009 to 2020, like an extremely low rate environment for that long. That is unheard of. In addition to that, you have an incredibly low rate environment, you know, quantitative easing from 2020 to 2022 that saw rates at unsustainable levels and really propelled our market and caused a ton of inflation.

I'm not sure that we have paid the price for that decade or two that we did that. And there could be a credit bubble that comes eventually to pay that price, right? Because the demand goes up, supply goes—you know, things go up and down, things go up and down.

We definitely paid a price for the last two years—two and a half years, actually—to get to where we are today since June 2022. Did we pay the full price? I don't know. And so that's what we got to watch. We've got to watch because you don't keep rates that low for that long without paying the price. And when I mean paying the price, I mean prices come back down, right? You don't have that much inflation without deflation.

However, in the short term, going into 2025, what would we need to see happen for an actual crash to happen or prices to come down? Really in any—because they may have decreased a little last year, but especially in the land business, I haven't seen a lot of people taking super aggressive price reductions. Was it harder to sell? Was it slower to sell? Absolutely it was. Did that impact the price drastically? Definitely not for my business and the people that I've been talking with.

So what would we need to see? Well, we would need to see a huge increase in supply, huge, huge increase in supply, right? Supply-demand. Or you would have to see a huge decrease in demand for that to happen. But in the markets that I'm tracking right now, it appears that we're kind of coming closer to an equilibrium, coming back to normal for the 2015 through 2020 market before the COVID era. We're really kind of getting more back to normal in equilibrium than we are going through a crash.

And so, how would we see demand fall or what would cause that? Well, rates would have to start increasing again. That could be kind of a worst-case scenario for us—if the tariffs are implemented and cause inflation, if our economy revives this year and inflation starts happening again, well, the Fed could continue raising rates. And that is absolutely what we do not want to happen for the land market.

Banks at that time could also make it harder to loan. One thing that we need to watch is, if you remember, I think it was SVB, Silicon Valley Bank—there were a few other huge ones that failed. This was about six, nine months ago. There are, I think (I forgot what it was) 50-plus banks that the Fed was saying were in similar troubles to those banks. And if things did not change, there could be more bank failures. With more bank failures, land loans are harder to get because land loans traditionally come from a bank's own money, portfolio loans. They're not sold off to the secondary market.

So if banks go down, land credit goes down, land goes down. So we've got to watch the money supply or credit getting tighter.

And the last thing that could impact demand would be unemployment rising and really people staying where they are. If people don't start migrating again, if people don't start getting new jobs, they don't start moving again—well, some of these markets that really grew during the migration COVID era could see some supply gains and would have to make sure that the demand is there to balance that out.

On the supply side, if the economy tanks, then people get desperate to sell their land and they start listing it, start getting foreclosed on, tax auctions, then yeah, we're going to see people panic-selling and we would see that.

But I would think if—and it's a big if—we did see a crash, and I'm not acting or doing my business as if this will happen, but it is a possibility. I think it would come from demand plummeting, which would then cause supply to rise because there's no longer any buyers.

But my hope is that landowners are relatively resilient with paid-off properties, which is why it has such a lag on prices like I talked about earlier. So I don't necessarily foresee that happening. I just know that eventually we will have to pay the price for the last decade of low rates. I hope that we've already paid the price in the past two years, but I'm not sure that we have fully.

Seth: Yeah, interesting. So it sounds like a crash probably won't happen, but you just explained what would have to happen for that to be true.

Neil: Correct. And I could just say, "Yeah, the crash is not going to happen. Let's move on." But I feel like the listeners today would want to hear how to make their own decisions. I'm just one guy with one opinion, and so are you, Seth. And just like anybody who comes on the podcast, all of us have our own opinions. And I like to think I'm educated or smarter than most.

But at the same time, if I can teach you all how to follow this stuff to where you learn how to think, you don't just learn how to watch, I think that's going to pay dividends. And if you all can track this data along with me, then I think it'll pay dividends for your business because you make better investment decisions.

Seth: And also like, it's probably worth noting, a crash sort of implies a very quick, sudden downturn. We're not saying it's going to like spike or go nuts and go crazy in a good way either. It could very well just slowly get a little bit worse. I don't know. We'll have to see.

Neil: Well, that's typically what happens with land. Land doesn't typically crash overnight. I mean, neither does really housing to some extent, but I think that we just need to pay a lot of attention to the economy.

When we think about what's happening with land, we need to think about credit supply, money supply, rates, and unemployment, and we need to make sure that—especially even like a stock market crash, right? Somebody's net worth being affected by a stock market crash could impact whether or not they buy land. So we need to stay attuned to the economy and what it's doing more than anything right now.

Seth: Gotcha. This is interesting what you were talking about earlier about how a lot of people were saying, "Yeah, I'm waiting until the election before I buy or sell or do whatever." And how that did sort of end up being true, at least for some people, where things did break loose.

And it kind of underscores this whole thing that you said—I don't know if you said this exactly, but basically perception is reality. Whether or not something is an issue, if people think it's an issue, it'll become an issue, which I can't stand. I wish people would be more rational and logical and go based on reality.

But if perception is reality, is there any way we can change people's perceptions? Or is that just kind of a case-by-case, person-by-person thing when you're having a conversation with somebody? When somebody says, I'm not doing something or I am doing something because this external factor, I guess, is kind of a salesmanship issue at that point, right? Just being able to help them see a different way.

Neil: Yeah, I mean, I think so on an individual level, I think that you can. So, for instance, can you and I sit down, have an educated conversation about the economy, where it's going, present stats back and forth and debate that? Sure, absolutely. Can we do it on a state level or a national level? I don't—we don't have the power to do that. We don't have the influence. And so the news is really what has the influence to do that.

One thing to watch, and this is especially relevant in land and housing, people make decisions on their land a lot based on what the housing market's doing. And so if they're watching the news and they hear that a housing crash is coming, well, they're probably going to be less likely to go out and buy some land.

So I think we just need to make sure to know what's being fed. We also need to know that with these market updates, you all are being educated. I don't want to say in real time, but today, we're kind of going through late 2024, early 2025. And you all are getting educated before the news comes out because all these numbers, like for instance, the reports on Q4 of 2024, they're not going to start releasing these reports—the big data companies—until like February or March of 2025. And so once that data gets released, then the news gets a hold of it. And so it always has a lag of several months.

And so what we're trying to do here is get you all the data early so that you can use it in your business early, but also to know ahead of time, maybe a month in advance at least, that this is happening. You need to pay attention to this. This is what you need to watch so that you're not just completely blindsided when some of this data comes out.

Because in a flipping business, like in land, there is no plan B. You buy a property, especially if you actually purchase it—like there's no plan B. You're not going to rent that thing like you could a house. If you can't sell it, you can't sell it. So we run an incredibly risky business. And so not to follow the market, I think, is one of the least intelligent things you can do as a land investor.

Seth: When you talk about this data and having it before it gets to the news, is there a place a person could go to get this data? I realize the average person might not know how to interpret it, but like, where are you getting this stuff?

Neil: So it's very, very difficult to find data on land. I would tell you that. I've searched and searched and searched. We can get data for housing easily, right? You can Google and get all these different companies doing it. But we have such a tight niche that to try to just search land markets or to try to do some really general research is next to impossible.

And so what we have to watch, I believe, is more of the economic indicators than we do specific land markets. I mean, obviously, we need to watch sold-to-sale ratios, we need to watch month supply, we need to watch sales prices—are they falling? Are they rising? And we need to just be attuned to all of that, but that's more market-specific than national.

And so that's why it's so hard for us to put together something like a national land market update on any kind of consistent basis, because we've got to follow the economy and the money supply more than we really do the land.

And I will say that I think most land investors, especially when choosing markets, are more educated than most, especially housing investors. Like housing investors are like, "Okay, I live in Dallas-Fort Worth," versus land investors are like, "I live in DFW, I'm going to buy in Washington, Florida, et cetera." And they really research those markets.

So I would say that I think most successful land investors know their markets relatively well. What they need is what we're going through today, which is kind of the overall economic picture. And that's why I hit and spent so much time on that.

Seth: Awesome. Well, anything else you want to cover? Is this kind of the gist of it for January 2025?

Neil: One last thing I want to go through. So each time we do this, I want to highlight a specific market to go through. That was the whole reason for Seth and I asking on a Facebook group, you know, what states do you want to see? What areas do we want to go through?

So very brief market update. I'm going to start with North Texas, which is DFW and surrounding counties, because that's where I know the best. That's where I heavily invest. That's where I'm an agent.

And one of the most interesting things that I saw, which I guess is not really surprising, but when you look at sales prices in the low acreage ranges, say 5 to 20 acres, 5 to 30 acres, where I would say that most investors end up because it's slightly bigger than infill and it's not large ag acreage—where most investors end up.

So in our run-up to about 2020, prices were increasing, say, 3% to 5% a year. Very, very normal price increases for median. You hit 2020, and gosh, you would have thought a rocket went off. 10% per year, 20% per year price increases, just crazy appreciation.

And the reason in DFW, or at least North Texas, that this happened is because the supply went down. The month's inventory—it's not similar to houses. You talk about houses, like four to six months is a balanced market, maybe six to eight. But with land, I mean, you can have 20 months of inventory and it'd be all right. You can have 10 months of inventory, just drastically different categories here.

But with land, the month's inventory on average went from about 12 months, about a year of inventory, and it just absolutely went down to like three months of inventory, three to five months of inventory. And for land, that is nuts. Like to have three to five months of inventory for land. And that's why you saw the massive price appreciation that you did.

Now, June 2022, is when all that stopped; the party stopped. That's when the rates had already taken a few increases. That's when things slowed drastically. And the crazy thing is, at that point, the month supply increased drastically to above previous levels. So the month supply went from 12 months all the way up to about 24 months. So that's double what it was before COVID, but the prices have stayed level.

They have seasonal variations, of course, but the prices went up, up, up, and then leveled out. And I think that has to do with what we talked about earlier, like with land. Most people don't have to sell. Most people, I would say, list their land on the market because they want to sell, not because they have to sell.

And so right now, the North Texas market is level, right? It appears to be in equilibrium. Now, if you go above that, you go 50-plus acres, and you're definitely going to have some counties with price reductions. That's some of the hardest ag land, essentially. Some of the hardest land to sell right now. You're definitely going to see prices going down a little bit because rates are so high. It's very difficult to get loans for that.

Now, infill, you follow the housing market; you're pretty much going to be good on that. And we don't have time to go into that today. But I feel like that's a good summary of North Texas briefly going through it and showing that prices are level in one of the hottest land markets in the U.S. that I've seen.

So that's my market summary for North Texas. And like I said, in future updates, we'll continue to go through and kind of highlight some of these different markets and give some good market stats on where they're currently at.

Seth: Totally. So yeah, it might be interesting. It's probably a conversation for another day, but it might be interesting to... Like if a person wants to do this in, I don't know, North Dakota or something like that, like where would they go? What information would they even be looking for? What do they scrape together? How do they make sense of it? How do they draw any conclusions from that?

Even if it's like broader economic data. So I know there's a bit that goes into this and maybe it's too complex for the average person, but I'd be curious to know how that stuff works.

Neil: I mean, simple indicators, right? I'll give you four simple indicators. You follow the median price for an acreage range in a specific area you would know. You follow the number of sales. You see essentially something along the lines of sold-to-for-sale ratio, or for instance, a month of inventory, which are very similar concepts. Both of those are very similar concepts. You can also follow a sales price median, things like that, or price per acre instead of sales price.

And so you follow those metrics and you chart them out over, say, like on my chart that I have in front of me, you chart them out over 10 years. And you can definitely see—or five years or at least four years pre-COVID versus now. And you can pretty much see where things are going.

I mean, the advantage that we have as land investors, if we're doing our job right, is that a lot of the time we're in and out of a property by the time we buy it, in and out of a property in, say, 90 days. And so the probability of a market really crashing in a huge way—and when I say crash, I mean like 20% value loss or more within 90 days—that is very unlikely unless things go absolutely haywire. And they can at any time. At the same time, that is very unlikely.

Now, could it be a 5% price drop or a 10% price drop in 90 days? Absolutely, yes. And we saw that in 2022 into 2023. But the probability of a crash in a lot of these markets—things would have to get really, really bad really fast. You would have to see like a “black swan event” that they call it for that to happen. And you can never predict the black swan event, but what can you do to be prepared for it? Well, you can buy properties at a very, very steep discount.

Because if you bought it at 50% of its value and the market goes down 20% or 30% overnight, you're still all right. The people who are at the most risk are the people who buy it at a very high value. A subdivision play, similar to what I do, takes the most risk, which is why I watch this stuff.

Seth: Yeah, totally. I wonder when you've got your subdivision type deals and you have—I don't know how much straight flipping you do with no improvements at all—but with both of those different profiles, what is the typical turnaround time from the date you make an offer to somebody to the date that you've bought and then sold either that one property or all those properties? Are we talking like six months, nine months, 12 months, or years?

Probably depends on how complex it is. But because when you're talking about looking at a 90-day cycle, like if it takes a year or something to do this, it's like, man, I got to predict a lot further now and be a lot more sure about this or offer a lot less so that I can be sure it's probably not going to go tanking on me.

Neil: Yeah, I mean, I'll tell you what I specifically do. So I'll tell you the timeline. I would say 5% to 10% of my business is buy as-is and flip. Incredibly difficult in my market to do that. Either that or I'm not good enough at marketing—one of the two.

And so those projects are, from the time I go under contract, I put a 30-day close on it. I actually do buy everything. I don't really wholesale or do assignments. And I tend to sell it for full market value. And that takes 90 days or less from the time I go under contract—30 days close, 60 days to sell it once I own it.

For a subdivision play, the longest that it's ever taken was like 12, 14 months. And that's a project that recently closed out. That's actually how you and I met in the very first one that we discussed. That one just closed out this last month. And I have some bigger properties, some entitlement properties that take three to six months to entitle and then a year or two to sell. But those are multimillion-dollar properties.

So I think it depends on complexity. It depends on other things too. But I mean, the quickest subdivide I've ever done was under contract for 60 days and then sold within 30. So you're right. And that's why I watch these stats. And that's why I share this with you all, because on a subdivide play, or especially a high-priced play, which is both of what I do—average purchase price like $300,000 to $800,000 on the subdivides, and they take six to 12 months, if not more on average.

So I take the most risk. And so I've got to be in tune with these markets. I mean, yeah, I could seller finance these off maybe and sell the notes, but I really don't want to do that as a business model with that high price of properties.

And if I see something coming, then I reduce my offers by 10%, reduce my offers by 20%. And we did that in late '24 because we weren't sure what '25 was going to look like. And truthfully, so far, '25 has looked better than I thought it would, even though rates haven't decreased as much as I thought they would. So it's a very interesting dynamic.

Seth: Fascinating. Well, anything else you want to cover? Is that pretty much all the meat we're trying to get to today?

Neil: No, we're great. I hope that provides everybody who listened to this just actionable insight. And so if you all see anything that you would like us to cover, you see any stats that you would like us to mention, feel free to email that over to me or Seth and we'd be happy to take a look at it and improve.

Or especially if you know how to get this data easier—I spend a lot of time compiling all this. So if anybody has some tips on how to get some market data easier than the way I'm currently doing it, I'd love some insights into it. But I hope you all enjoyed this.

Seth: If people want to get a hold of you, Neil, how would they do that?

Neil: The best way to do it would just be my email, neil@theclemgroup.com. And I'm sure you can put it in the notes.

Seth: Awesome. In the show notes for this episode, it's going to be retipster.com/jan2025. That's where you can find that.

Neil, thanks again for being here. Great information. Hope everybody enjoyed it. We'll talk to you next time.