Are tractor prices dropping, have they peaked?

[Snobdds]

I don’t see a housing crash, but I do see a leveling off of prices or reduced value growth. Mortgage rates are now at 5%.

The crash in housing probably will not come like people think any time soon. As long as supply remains tight, there will be no crash. As soon as supply raises again, then it can crash.

I'm sure the fed has a deal with blackrock to buy up all the inventory to keep the market from crashing. The question then becomes, can blackrock scale up enough to keep renters in their homes. I have read they can't get these newly acquired properties to the rental market as there is no labor or materials to make them market ready. Will blackrock hold the bag for the fed...time will tell.

 

[Reddogs]

When the recession happens, anything that is optional/recreational will drop prices dramatically. I’ve lived through enough of these cycles. If you sit on cash and have it to spend in a recession you can get insane bargains on things like boats, lake homes, classic cars, etc. If anyone tells you “It’s different this time”, start picking out which of their possessions you plan to buy in the distress sale.

Very true, but if you have things that lose value such as stock, real estate, land, businesses, etc... It makes it a bit hard to keep out of the 'distress', to say nothing of the loss of capital and money...

 

[Reddogs]

No other generation will have the wealth the baby boomers did.

Their prime purchasing years happened to be when interest rates were high, but asset prices were low. They bought homes at a low cost, but had a 15% mortgage. In the 80's when interest rates dropped, they refinanced their their primary home down to a point they paid it off quicker than the 30 year norm. Then they started to buy second homes and time shares.

The current generation has the exact opposite. High asset prices but low financing. They will never be able to use interest rate movement to their benefit, nor will they ever have cheap asset prices. The dynamic is totally different.

Yes, much like Germany did in their 'little bout of inflation'... When hyperinflation drove Germans to use money as kindling

 

[IndyJay]

Very true, but if you have things that lose value such as stock, real estate, land, businesses, etc... It makes it a bit hard to keep out of the 'distress', to say nothing of the loss of capital and money...

The things you mention always rebound in value. You don't lose anything until you sell.
Hint: Buy low, sell high!

 

[Snobdds]

The things you mention always rebound in value. You don't lose anything until you sell.
Hint: Buy low, sell high!

The past decade was...buy high and finance low.

I don't know if there is a one to one correlation on buy low and sell high...but we will find out soon enough.

 

[Cahaba Valley Farm]

The current generation has the exact opposite. High asset prices but low financing. They will never be able to use interest rate movement to their benefit, nor will they ever have cheap asset prices. The dynamic is totally different.

Interesting, never thought about it like that

 

[Reddogs]

The things you mention always rebound in value. You don't lose anything until you sell.
Hint: Buy low, sell high!

Well, in the last big recession, things went south overnight before you could sell. Its not as easy as that...

 

[lman]

It seems like recently wages have gone up so much that they would need to go back down before prices would be able to go down much. From my experience it seems rare for wages to go down. When workers at McDonalds are making $20/hr, it seems it would be hard to bring prices back to what they were a couple of years ago.

 

[Torvy]

It seems like recently wages have gone up so much that they would need to go back down before prices would be able to go down much. From my experience it seems rare for wages to go down. When workers at McDonalds are making $20/hr, it seems it would be hard to bring prices back to what they were a couple of years ago.

One of many reasons this inflation has legs. Everyone up the salary food chain will want/need similar increases.

Holding cash is downright idiotic in an inflationary cycle. Put money in assets that tend to gain value over time...mostly real estate. By the time house prices collapse, of they do, the inflation will be stabilized or we will have bigger issues.

 

[Bill Guenthner]

Well, in the last big recession, things went south overnight before you could sell. Its not as easy as that...

You’re missing the point. People who don’t owe money and have a pile of cash in the bank aren’t selling in a downturn, they are buying up the properties of the people who have mortgages that they can no longer pay. People who pay cash can wait to sell when markets are up. I used to work for an older guy who during the depression in the 1930s bought every house on his block from the bank for 10 cents on the dollar when the local employer closed down.

 

[Torvy]

You’re missing the point. People who don’t owe money and have a pile of cash in the bank aren’t selling in a downturn, they are buying up the properties of the people who have mortgages that they can no longer pay. People who pay cash can wait to sell when markets are up. I used to work for an older guy who during the depression in the 1930s bought every house on his block from the bank for 10 cents on the dollar when the local employer closed down.

We will take a while to get into recession. While you are holding cash as inflation continues, your money is dying. Invest now and pull that money when the worm starts to turn. Inflation is the enemy now. Recession will not happen until rates get high enough to slow down the economy. The Fed has to move slowly as slamming on the brakes is like doing the same on ice. They should have done so earlier, but that is water under the bridge. It is going to take increases of .25-.5 each quarter for the next 4-5 quarters. This event is not like the great depression of the 30s or the 2008 housing debacle. This is closer to a 70s era inflation event...without the underlying stagnation. We have had very few periods of deflation since we went off the gold standard.

 

[Reddogs]

You’re missing the point. People who don’t owe money and have a pile of cash in the bank aren’t selling in a downturn, they are buying up the properties of the people who have mortgages that they can no longer pay. People who pay cash can wait to sell when markets are up. I used to work for an older guy who during the depression in the 1930s bought every house on his block from the bank for 10 cents on the dollar when the local employer closed down.

I think your missing the point, as a norm most people owe money, and dont sit around with a big pile of cash to take other peoples properties when theres a downturn.. So its not cut and dry as one might think..

 

[jyoutz]

Bigger numbers does not necessarily mean wealth. Inflation literally makes the numbers bigger, but does not help buying power.

Gas prices are only easing because of election year smoke and mirrors. There is only so much in strategic reserves and the e15 move is a joke. Until or unless they make a commitment to pipelines and other domestic oil production rule changes, it is not worth it for the companies to produce much more. To them, the policy is like this: Politician "we want to kill you"...oil producers "darn, we will have to pull back and evaluate" Politicians: " umm, yeah, so we need you to keep producing for now, but later we will still kill you" oil producers "no thanks, if we are going to die anyway, why would we make it easier on our killers?" Politicians "it is all the greedy oil companies fault"

As for used car prices, those are mostly used trucks and others with low gas mileage. Prices dipped a little, a few hundred on 20k+. Responded to uptick in gas prices. Not seeing much real movement...my 21 y/o is looking for his 1st (used) car, so we have been watching closely.

There are still a lot of people trying to buy before the rates and prices both get really high. Eventually, the two going up will stall out the economy and we get recession. Unfortunately, the decision makers don't understand how it works, or they don't care. It will not be pretty.

Permian Could See Production Surge As New Permits Reach All-Time High

Higher crude demand and elevated oil prices have driven the number of horizontal drilling permits in the Permian to a new all-time high in March

www.yahoo.com

 

[Reddogs]

We will take a while to get into recession. While you are holding cash as inflation continues, your money is dying. Invest now and pull that money when the worm starts to turn. Inflation is the enemy now. Recession will not happen until rates get high enough to slow down the economy. The Fed has to move slowly as slamming on the brakes is like doing the same on ice. They should have done so earlier, but that is water under the bridge. It is going to take increases of .25-.5 each quarter for the next 4-5 quarters. This event is not like the great depression of the 30s or the 2008 housing debacle. This is closer to a 70s era inflation event...without the underlying stagnation. We have had very few periods of deflation since we went off the gold standard.

Very true it is dwindling right in your hand. You are loosing value on that cash pile and the only way to stop the loss is to invest.

 

[Handloader109]

Recession is closer than you think. Late next year or earlier. Inflation may slow, but it isn't going to reverse for a while. Interest rates are going up pretty quickly, mortgage rates are in the high 5% range which is 2% in just a few months. We are still building like crazy here in NW Arkansas. But can't seem to get ahead. Numerous apartment complexes going up also. Lots of kids won't be able to buy homes, prices are insane, and if interest rates get to the 7 or 8% range, it will lock out a bunch more.

I definitely don't see those 2nd homes affecting anything for well over a decade in any significant way. They will be inherited and why sell if you can keep it? One or two kids? Great vacation home, one gets it one month, other the other month, or one takes as part of inheritance.... or just rent out.... still doesn't really slow housing market. Crash in prices? Not from where I sit.

 

[IndyJay]

You’re missing the point. People who don’t owe money and have a pile of cash in the bank aren’t selling in a downturn, they are buying up the properties of the people who have mortgages that they can no longer pay. People who pay cash can wait to sell when markets are up. I used to work for an older guy who during the depression in the 1930s bought every house on his block from the bank for 10 cents on the dollar when the local employer closed down.

Same with other investments. When stock drops, you buy it for long term investment. Day traders are the ones who take a beating.

 

[5030]

Must be why I'm a 'slum landlord'...lol Homes are an investment that steadily appreciates.

besides, I provide a place to live for those that cannot afford a 'palace' for one reason or another, usually poor personal finance management.

 

[CloverKnollFarms]

Lumber is dropping, as interest rates rise.

 

[5030]

Supply and demand always dictates pricing. Been that way forever at least with most tangible commodities.

Far as tractors are concerned, other than agricultural purchases, ALL tractors are considered discretionary purchases (as in something of luxury, not necessity) so tractor pricing will follow market trends 100%.

Unless you farm (which I do), no one on here needs a tractor, consequently, at some point in the near future all the incentives will vanish as the prime increases.

Simply put, what you need and what you desire are 2 entirely different things.

 

[jyoutz]

Supply and demand always dictates pricing. Been that way forever at least with most tangible commodities.

Far as tractors are concerned, other than agricultural purchases, ALL tractors are considered discretionary purchases (as in something of luxury, not necessity) so tractor pricing will follow market trends 100%.

Unless you farm (which I do), no one on here needs a tractor, consequently, at some point in the near future all the incentives will vanish as the prime increases.

Simply put, what you need and what you desire are 2 entirely different things.

True. But some people who don’t farm still need tractors. Many of us live on roads that are not county maintained.