Monday, June 20, 2011

Illinois Collar County Farmers Take Advantage of Housing Bust

Chicago Tribune (h/t the sister):
Brothers Bob and Ed Baltz are two who have capitalized on the dramatic turn of events. More than five years ago, they had all the hard-charging, prominent local and national builders, including Neumann Homes, Del Webb, Centex Homes and Pasquinelli Homes, knocking on the doors of their family farm.
"We had everybody coming in and making offers," Ed Baltz said.
The last offer they received, in 2008, never closed, because of the housing industry's crash, but a developer wanted to purchase 600 of their acres in Will County for $72,000 an acre, or more than $43 million.
The two had already sold slightly more than 300 acres outside Chicago, at an average of $25,000 per acre.
They took those proceeds and bought 4,000 acres, in 17 downstate counties, that they rented to other farmers. That left them 1,800 acres to farm corn and soybeans in Chicago's exurbs, including fewer than 1,000 acres they owned.
That's when fate smiled on them.
During the past year, corn prices have doubled on increased demand for use as livestock feed and biofuels, and soybean prices have risen by more than 50 percent.
As those prices rose, the Baltz brothers began selling their fertile land downstate that they paid $2,500 to $4,000 an acre for and which is valued at as much as $8,000 an acre. During the past 12 months alone they've sold more 2,000 acres. Now they are more active farmers in their own backyards.
During the past three months, they've purchased from lenders almost 1,000 acres of farmland in Will and Kendall counties that were once scheduled for homes, paying a fraction of what developers paid years ago.
"A lot of (banks) just want it off their books," Ed Baltz said. "We got a little more power because we got the cash to spend."
Well that seems to have worked out well for them.  Just imagine where they would be at if that $43 million sale would have gone through. 

6 comments:

  1. I found the article interesting and some of the comments misleading. I talked to Ed at Christmas and Bob today and both indicated that they are cash poor. The land deals are done by trades so while they may have much in the way of land their cash is tied up. This makes me wonder where the quote from Ed Baltz saying "We got a little more power because we got the cash to spend." came from. The brothers are still trying to come up with the money to settle the estate of their father's death in 2008 where they inherited much of the land. Things are not as rosy as this article makes it out to be and Ed must also deal with the hardship of constantly traveling to Costa Rica and deal with all the farm ground he inherited there. I would say it was not fate that smiled on them but the fallout of the death of a long time farmer.

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  2. That's interesting. I would anticipate that anyone buying and selling that much land might be pretty cash-poor at any one time. That many land deals would be hard to manage, but if you are coming out ahead on them, things should work out. I would assume that unloading downstate land at record high prices isn't too bad of an idea, considering that commodity prices may go down at any time.

    I am fascinated by your statement that they also inherited land in Costa Rica. Their father must have been a very interesting guy.

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  3. John Baltz was very interesting and the stories that can be told. :-) If you do a search for "John E. Baltz" you can find out more about him.

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  4. I would love to hear why he decided to live part-time in Costa Rica, and what made him decide to buy farmland there. I'd like to know why Costa Rica and not Brazil or Argentina, where the crops could be the same and the growing season is opposite ours.

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  5. Let's just say I can neither confirm nor deny a second family in Costa Rica. An interesting family that if anything can keep you wondering how much is truth and how much is just rumor.:-)

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  6. Wow, that's even more interesting. I was thinking along the lines of rich soil at cheap prices, long growing season, etc.

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