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Big money investors looking for inflation hedge turn to America’s homestead

Big money investors looking for inflation hedge turn to America's homestead

Big money investors looking for a hedge against inflation have been turning to farms and ranches, according to brokers, who noted that people with “significant amounts of cash” are still investing in remote real estate following the so-called COVID “Zoom boom.”

The COVID-19 pandemic, forced millions of people to work from home and use tools including Zoom video conferencing to connect with their coworkers as thousands of companies had to rethink the future of their workforces and offer remote or hybrid-work options to keep employees satisfied. 

The pandemic has also shifted more people into small cities and suburban areas as they are able to work from anywhere. 

B. Elfland, the managing director of Hall and Hall, a rural real estate firm in the Rocky Mountain West and Great Plains regions, told FOX Business investors are “looking for an inflation hedge” and noted that “the other financial motivation that we’re seeing on the selling side is just tax risk.” 

Ranch land outside Bozeman, Montana (FOX Business)

“People are uncertain what tax laws are going to do so there has been an increase in sellers’ interest to get things closed in 2021 because of unknown tax changes and there’s this heightened interest in buying immediately because of inflation risk,” Elfland went on to say in an interview that aired on “Mornings with Maria” on Wednesday. 

Last week it was revealed that U.S. consumer prices accelerated at the fastest annual pace in more than 30 years as supply chain bottlenecks and materials shortages persisted and gasoline prices surged.

The consumer price index climbed 6.2% year over year in October, the Labor Department said. The increase marked the largest annual gain since November 1990. Prices rose 0.9% month over month. 

INFLATION WILL LIKELY GET WORSE BEFORE IT STARTS IMPROVING, GOLDMAN WARNS

Analysts surveyed by Refinitiv were expecting prices to rise 0.6% in October and 5.8% annually.

The cost of shelter ticked up 0.5% last month and was 3.5% above year-ago levels. 

Real estate has historically been a long-term investment, however, according to brokers in Montana who spoke with FOX Business, the wealthy have been putting their money in these less risky land and real estate investments for the short term.

Land outside Bozeman, Montana (FOX Business)

FOX Business chief national correspondent Connell McShane reported on “Mornings with Maria” from Montana on Wednesday that currently “a new twist “has emerged where “a new round of buyers” have been entering the market. McShane reported that “a lot of them are big money investors” who have “plenty of cash, but also plenty of worries” amid rising inflation. 

“More and more people are thinking about the economy and thinking about what inflation is going to do to their net worth and if they’ve got significant amounts of cash, land is a lot more fun to spend it on than a stock portfolio,” Craig Janssen, with Live Water Properties, a real estate brokerage specializing in land and ranches for sale, said. 

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McShane reported on Wednesday that as demand for land and remote homes continues to increase, so do prices. 

He provided an example of those price hikes, noting that a home in Big Sky, Montana was listed for $10 million dollars one year ago and is about to sell for $16 million.  

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FOX Business’ Audrey Conklin and Jonathan Garber contributed to this report. 

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