New Tractor Sales Are Declining

[2manyrocks]

Let's try to make sense of the NPR article that basically says inflation is up, but people are still spending, and then asks the question whether anyone knows if they will still be spending at the end of this year?

Those who bought real estate in 2019 or before were easily able to double their money in middle Tennessee if they sold before the Fed started raising rates about March, 2022. Realtors who had listings made good money. Closing people made good money. Fact is, some made windfall amounts of money that I suspect is still being spent.

On the other hand, there are those whose timing missed the market. There's one particular house I've been following. It sold for $178,122 in February 2017 and was listed for sale in March, 2022 at $399,900. They dropped the price to $310,000 in June, 2022 and it looks like the price drop resulted in some over bids leading to a sale for $333,000 in July, 2022. The buyer installed inexpensive new kitchen cabinets and bath fixtures, painted, and I think may have put in vinyl plank flooring. He listed for sale in September, 2022 for $575,000.

The property still hasn't sold after a series of price drops. The asking price is now $399,900.

You can tell from the listing price activity where he thought the market was, but then higher interest rates have taken some of the excess out of the real estate market. Whoever bought the property in 2017 for $178,122 and sold in 2022 for $333,000 did pretty well for themselves with a house that wasn't that attractive.

On the other hand, the guy who paid $333,000, made improvements thinking he could get $575,000 and is now trying to sell for $399,900, might see things differently.

 

[Cahaba Valley Farm]

You can tell from the listing price activity where he thought the market was, but then higher interest rates have taken some of the excess out of the real estate market. Whoever bought the property in 2017 for $178,122 and sold in 2022 for $333,000 did pretty well for themselves with a house that wasn't that attractive.

On the other hand, the guy who paid $333,000, made improvements thinking he could get $575,000 and is now trying to sell for $399,900, might see things differently.

Yeah he's going to have to sit this out. With where interest rates are headed he has bought himself a new house.

 

[2manyrocks]

Nashville home prices became really expensive between 2019 and mid 2022. If houses continue to sell at the inflated price levels of 2020-2022, he may be able to get out without a dollar loss. However, if the real estate market hits an inflection point where houses no longer sell for 2020-2022 prices or general economic sentiment changes to recession, that is where the basket of eggs takes a tumble.

 

[Cahaba Valley Farm]

I'm posting this here as I find it relevant to this discussion. The automakers believe they have found the "sweet-spot" for supply versus demand. I think their whole industry is about to get turned upside down because of the cost of financing is going way up. When the cost of borrowing goes up the cost of goods has to come down.

 

[ruffdog]

The auto makers can be more flexible on financing if they have their own in-house finance source.

 

[rScotty]

This

SNIP
On the other hand, there are those whose timing missed the market. There's one particular house I've been following. It sold for $178,122 in February 2017 and was listed for sale in March, 2022 at $399,900. They dropped the price to $310,000 in June, 2022 and it looks like the price drop resulted in some over bids leading to a sale for $333,000 in July, 2022. The buyer installed inexpensive new kitchen cabinets and bath fixtures, painted, and I think may have put in vinyl plank flooring. He listed for sale in September, 2022 for $575,000.

The property still hasn't sold after a series of price drops. The asking price is now $399,900.
SNIP

We are seeing the same thing in housing here in the rural Western US. Land has gone up remarkably, and houses even more....so much so that some are just starting to come down in price, although at $399K that example guy is still making a tidy profit. I'm much more curious what will happen when prices fall below the last selling price. Locally, It is looking like we are headed that way in houses - not so sure about raw land.

For tractor and car prices, we should be less confused because we can compare cash price on identical units. That ought to make it easier to see and to predict trends.

I'm guessing that cash prices have to flatten out for awhile before they can start to drop - has that happened with tractors yet?

 

[Cahaba Valley Farm]

Powell admitted yesterday to Senator Kennedy that he is not only trying to stop inflation but he's also trying to cause disinflation.

 

[tacticalturnip]

I'm posting this here as I find it relevant to this discussion. The automakers believe they have found the "sweet-spot" for supply versus demand. I think their whole industry is about to get turned upside down because of the cost of financing is going way up. When the cost of borrowing goes up the cost of goods has to come down.

How odd, seeing anything in Maine on the news, especially a place I drive by often.

 

[WM75Guy]

If sales are declining it is certainly not from lack of inventory. All of the dealerships in my town look like they are having trouble finding enough parking space for their inventory. I drive by JD on the way home. Normally the tractors are in 1 row across the front of the property. They are now 2 and 3 deep, from SCUT to large ag models.

 

[Bearsixty7]

If sales are declining it is certainly not from lack of inventory. All of the dealerships in my town look like they are having trouble finding enough parking space for their inventory. I drive by JD on the way home. Normally the tractors are in 1 row across the front of the property. They are now 2 and 3 deep, from SCUT to large ag models.

Been that way at the JD dealership (United Ag & Turf - John Deere - Van Alstyne, TX) in Van Alstyne for months, they are probably 6-8 rows deep and lots of implements. The New Kubota dealership (Zimmerer Kubota & Equipment | Six Locations Serving the DFW Metroplex) down the road from them is also increasing inventory every time I go by.

Inserted links in case anyone wants to check inventory for something they can't get elsewhere.