theDirt Weekly: Hope, desire, & the $50k per acre pasture
March 4, 2023
What is behind a price? What can be the rationale of a cow pasture with a $50,000 per acre (or more) price tag? This a number far beyond the production potential of that acre as it is now; whether in corn, in cows, or in any type of agriculture. I submit, dear reader, that price is a numerical representation of value (they are not the same) and value a derivative of desire. Oh, but what is desire? A simple word. Merely two syllables. But thorny with undertone and the myriad unspoken emotions which compose it.
In the case of price and real estate, is desire greed? And what is greed but the desire itself for more money? Or more land? Or more of something else? Or is desire hope - the starry-eyed enthusiasm of industry, of potential, of what could be? Desire is all of them. It is none of them. Desire is knotty with the nuance of the experiences of the individual exchanging their dollars (and a mortgage) for Dirt. Desire can be tinged by something so mundane as the weather. Or time of year. Or color of paint. And just as every word of this column is flavored with the accumulation of over 40 years of Your Humble Authorās experience (and desires), so too are the buy-and-sell decisions of every individual in the market salted with their own emotional baggage. And those decisions, and the desire behind them, are so thick with subtext as to be impossible to name and quantify. Except, that is, in price. And the market price of desire for Dirt in my corner of Texas seems to be about $50k per acre.
The Texas Prairie Project
For the past few weeks Iāve been spending a lot of my āfreeā time in a skid steer snipping junipers (and mostly ignoring the news). And there are lots and lots of junipers to be snipped. An extremely large, hydraulic shear is attached to the skid steer, and I travel across the pastures of the family ranch (not very far from one ācedarā to the next so thick are they) placing the base of each shrubby tree in between those huge scissor-like blades, pressing a button, and then crushing the trunk of the juniper until it falls to the ground. Day after sniffling day. Hour after sneezing hour. Entire weekends. From day break right up until dusk. Ahhhh, it is satisfying. But why?
Hope, dear reader, hope. As manager of the family ranch, I have a vision. I have a vision of the Texas Prairie as it was. I dream of tall, green grass. Grass all the way up to the stirrups; much like the pioneers saw when laying eyes upon the Texas hill country for the first time. Little Blue Stem. Big Blue Stem. Indian grass. Switch grass. Eastern grama. I have hope that, with the help of some electric wire, managed grazing, and a bit of prairie seed mix thrown here and there, a version of the Texas Prairie as it was might return to the ranch. Also I hope that my effort will produce a profit in the form of grass-fed beef, fattened on the terroir of rich lime soils, and sold directly to the Austin consumer who is right now on our doorstep. So much hope. So many dreams. And those two things can drive a person far beyond normal limits. And because they share my vision (but for reasons of their very own), the family funds this hope. And so I sweat and toil. I work and work with visions of sunny prairies and cattle gobbling tall, thick grass on my mind.
$50k per acre (or more)
Another person may look at these acres over which I sweat and swear and, where I see grass and pasture and beef, they see a future development. Tree-lined streets and little boxes made of ticky-tacky. A developer might gaze upon this cow patch and decide, with his or her own hopes and dreams in tow, that what can be bought for $50,000 per acre wholesale can be sold for $150,000 per acre retail. And the developers greedily eyeing our acres are probably not wrong. Not in the long term. One familyās desires are nothing compared to the dreams of five hundred families. In this light it is difficult even in these dark and uncertain times to conceive that the wave of suburbia might stop (much less recede).
I look at the parcels surrounding the ranch and what only a decade or so ago were a whole lotta cedar and mesquite infested limestone pastures are now more and more exactly that: development. And so the hopes and dreams of tens of thousands, hundreds of thousands, Millions! of people run through the land around Austin like a bulldozer. And neighborhoods spring up in overgrazed pastures like cedars, unwanted and unbidden, stealing grass from hungry cows. But so it goes. One cannot turn back the tide with mere anger and Dirty words. One cannot defeat the hopes and dreams of the consuming masses with naught but a skid steer and a tree shear.
The past, the future, and what it all means for real estate
I sweat and shift in the skid steer and listen. I listen to that biography of LBJ which I canāt stop talking and thinking about. Because while it certainly is a biography of one man, it is even better as a history of our grandparents and their parents. It really is the story of all of us. So I listen about the hill country in the early part of the last century. Almost 100 years ago now. I dwell on what was and will never again be. And I dwell on how the lessons of the past might apply again today.
In that audiobook, over 30 hours of listening, I am back in the 1930ās - the Great Depression. Depreciation. Falling prices. Uncertainty. Fear. Starving children and working 14 hours a day for 7 days a week at a nickel an hour. And the fact that the spectre of that era exists as a boogeyman in our national consciousness even today is telling of how bad it was. Twenty-five percent unemployment. Farmers going bankrupt en masse. Not enough cash. Too much production. But not enough food. Too much land for sale. But there were no buyers. Because there was no hope.
While it would be foolish and complacent (every warrior knows that complacency kills) to write off a repeat of the Great Depression as a possibility, personally I assign it a very low probability. I see the opposite, the return of inflation, entrenched and difficult to fight with limited tools, as the much more dangerous probability. The reason is just as stated above - the Depression still looms very large in our collective memory. And I think that we (and therefore our elected representatives - and probably even the unelected ones), when it comes to brass tacks and either-or decisions, fear the Depression possibility so much as to prefer the hell of a fully-employed inflation over the hell of a highly unemployed deflation. In fact, I think we would do just about anything to avoid another Great Depression. Just look at all the things we did in 2008-2011 to avoid that nasty monster. After all, the wise commander knows that the Marine busy painting rocks is far better than the bored (and trouble-minded) Marine lazily idling by. So too the Wise Politician knows that people working three jobs to make ends meet are far too busy and therefore far less dangerous than a population with nothing to do but grumble and think about how hungry they are.
Coda: Hope. The future. And snip, snip, snip
I am a sucker for Spring. I am a sucker for Bluebonnets. I am a sucker for the first shoots of tender grass pushing through the earth. There isnāt much better for inspiring hope than a cool, fresh spring morning after a rain. The birds singing. The seasonās first wildflowers blooming. A hot cup of coffee in hand. Planted in such fertile fields, the mind wanders the lines of the future with hope.
The future, that abstract thing, is a land of many possibles. And human-kindās ability to ponder it, to consider it, to extract those possibilities from the foggy darkness of abyss with nothing but imagination is at once our greatest gift and our greatest curse. We, Humans must be humble with this gift. Often we are not. Often we consider the future as far more predictable than it really is. When it comes to the future, sometimes we are kids playing with matches.
But despite the danger, we still must consider the future. We cannot turn away from it. Because dear reader, we must dream and hope. Then we must plan. And then we must act. Looking back, I find that our species is fueled almost entirely by dream and hope. So we must wager a guess on the future even knowing that we will very likely be precisely wrong. But we can be still be generally correct. And being precisely wrong but generally correct, in the opinion of Your Humble Author, is why Homo sapiens is the dominant form of life on earth1.
Right this second, fresh off the glow of a beautiful spring morning and despite my typical doomy, cynical take on the immediate future, I consider the American economy to still be full of opportunity. Full of plenty. Is there a cost, a price to pay for past clumsiness? Likely. We are just as condemned to answer for the past as to dwell and guess on the future. But that thing called price, the print spelling out desire and greed and hope at $50,000 per acre, is so much ink and paper. Ones and zeros on a bankās balance sheet. Because the reality is that in terms of true wealth - goods and raw materials and, more importantly, the potential of our country and society to produce - we are still very, VERY wealthy. Itās only our accounting system - the dollar - that is broken. And that we must endeavor to fix.
The Wise Investor knows that the future is full of problem as much as opportunity. Hard times and good. That great generation that survived the depression learned that lesson in a very hard way. Just as their parents learned but in a different way and in a different time. And so peering into the future, full of our own hopes and dreams, and also foiled in the present by the wrong guesses and bad decisions of the past, we learn and act again today. The more I snip and turn, snip and turn, *sneeze!-sneeze!*, snip and turn, the more I peer into the future and guess and conspire and hope and plan and dream, the more I realize that we are acting out the same play that our forebears acted out all those decades ago. Guessing. Sometimes being right. Sometimes being wrong. All the while working it out in between.
Dear reader, have no doubt that I continue to fear all the boogeymen that exist in the aether. And there are plenty snarling in the dark. I fear the possibility of war and bad investments. Of inflation so bad that it is essentially the same as depression (two sides of the same coin). I fear effort spent on clearing cedar and the grass never coming back. And of the embarrassment of being starkly, nakedly, publicly wrong. With the words of history ringing in my ears, it is also hard not to fear another depression.
But I also speak to my neighbor, that hard-working contracting company owner, and in his voice I hear no fear. No, dear reader, in his work-exhausted words I hear hope. I hear business. I hear commerce. I hear the need for more employees (his biggest limiting factor) to support green shoots of fertile growth. Also I see hope in my fellow parents at the track meet: they are focused on pole vault and relays and dashes and not in how they are going to come by their next meal. They are not slaving long days for only a nickel an hour. Comparing that to the past of the Great Depression I look around in the present and you know what: as of right now, despite all the bad news, things are still pretty good. And existing in the reality of this present, breathing deep the cool, spring morning air, I consider the possibility that hope at $50,000 per acre might actually be a pretty good deal.
At least I think we are dominant although I consider the possibility that it is actually the viruses, the bacteria and the cockroaches that are in charge and we their ignorant vehicles.