Real Estate Bridging Industries

Many people have known that real estate has had relationships to many industries; manufacturing, construction, commerce, even Wall Street.  Unbeknownst to many, the rise and subsequent fall of real estate prices could affect other industries such as food.

With prices falling, many banks have taken possession of properties, which include single family homes, condos, developments as well as land.  During the boom, many developers and investors were scrambling for land, as cities sprawled out and new developments located further out.

But today, with financing difficult to come by, and many lenders tightening their policies, not only are current developments finding it hard to sell their inventory, but planned developments that haven’t broken ground will be put on the back-burner for some time.

Land that banks have taken over may be low on their priority list, as they look to clear their inventory of distressed properties and projects.

Crain’s Chicago Business reported that Illinois farmers are buying land back from banks (Crain’s Chicago Business, http://tinyurl.com/ydxhqoa).  Farmers who previously fight sprawling cities and developments and sold land to developers during the boom are now buying land back below what they sold for years ago.

With more land abundant for farmers, this could increase production rate of corn, soybeans and other agriculture.  It could also mean a growth spurt for locally grown produce and agriculture.

With corn (or corn derivative) supplying many of the food products in stores today, it may not be surprising then if food prices come down a bit.  There may also be many more farmers’ markets held throughout the city this summer. All this, depends on whether enough land is purchased back by farmers and high levels of agriculture product is produced to affect prices.  Available land, financial disposition, food consumption and supply & demand (export markets, droughts, even tariffs) are relevant factors to consider.

Increased agriculture production could also help related industries such as manufacturers of agriculture equipment, seed suppliers and related agriculture dependent businesses.  Energy consumption could also rise slightly, to help compensate for the increased use of production.  Additional resources would be tapped, such as water availability, which would then further accelerate energy consumption.

After production, food product would also have to be transported and delivered to various sites for processing.

This could have a direct impact on food, energy, raw materials and what your local fast food value meal #6 with fries costs.

Sherwin is a REALTOR® in the Chicago & Suburban area with @properties. Questions can be forwarded to Sherwin Sucaldito

”Real Estate Bridging Industries” by Sherwin Sucaldito is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.
Based on a work at Realty Evolved