One of the commonalities between myself and others who have been in the land development business for several years is that we are veterans of multiple economic cycles. We’ve experienced the boom times and the crashes (and the less crazy times in between). Living through the highs and lows in the land development business means I’ve developed a somewhat thicker skin (although economic downturns are still enormously stressful).
There can be silver linings to the down cycles, and there can be pitfalls to the upcycles. A savvy land developer knows to watch for these. I can often recognize a seasoned developer by their steady “middle of the road” approach during all cycles. When times are good, they don’t get ahead of their skis, so to speak, and overextend themselves. When the economy takes a downturn, they don’t go crazy trying to buy up all the would-be bargains. I’ve seen more than my fair share of developers get caught up in the emotions that come with living through economic cycles.
Having a long-term (or, at least, a longer-term) perspective makes it easier, in my opinion, to weather the economic cycles. I do find that keeping this perspective is easier to do with land investments than with other investments. Land value is typically impacted by several factors (some of which are not correlated to the current economic cycle), so the economic impact on land prices when a downturn cycle happens may not be immediate. (This, unfortunately, can be true for upcycles, as I’ve seen land prices lag behind an economic upturn. This is why I think successful land development requires an ability to “catch the right wave” to buy or sell at the best point.)
I’ve found land development can be impacted not only by the national economic cycle but also by changes in regional and local economies as well. I try to keep abreast of what’s happening in each of the economic tiers. Following the regional and metropolitan business community updates is helpful, but I think there’s no substitute for just getting out there into the community and talking with people! And, frankly, the people that I’ve met and the friendships I’ve developed through this career have been equally (or more so!) rewarding as the land projects themselves.