(Editor’s Note: Farmers National Company issues regular reports on farmland values based on what their professional farm managers, who are often involved in real estate sales, are seeing. We have included the report for each of the regions, states of the country where the company recently reported.)
Overall average values of crop ground and grasslands have slipped from the highs of several years ago, but are still historically strong, according to Farmers National Company. But where are land values heading?
“The agricultural land market is in a time of equilibrium as the supply of land for sale is fairly in balance with the demand to buy land,” said Randy Dickhut, senior vice president of real estate operations for Farmers National Company. “The supply of ag land for sale is generally on the low side of normal as some landowners are deciding whether to sell now or keep their land. Demand to buy land has trended lower over the past few years as buyers are being more cautious.”
According to a survey of Farmers National Company agents, farmers and ranchers, who were the predominant purchasers of land that came on the market during the past decade, are not being as aggressive now when compared to recent years. Farm and ranch profits are down and lenders are being more careful in what they will lend on land purchases. Furthermore, investor interest in farm and ranch land declined as land values moved higher during the last four to five years and the return on investment slipped. But individual and fund investors are moving back into the land market as land prices soften.
Farmers National Company reports that, overall, demand for good land remains solid, but interest in lower quality crop ground and grassland is less in most areas.
“With the supply of land for sale being on the low side, the land market is stable at this time. But, factors affecting land values can surface over the next few years to move the land market in either direction,” Dickhut said.
“If the supply of land for sale increases due to lower crop and livestock profits or landowners decide to sell now for various reasons, the land market equilibrium could change, pressuring land prices lower. Demand to buy land by farmers and ranchers will change with profitability forecasts,” Dickhut continued.” Changing macroeconomic factors affecting interest rates and alternative investments could change the demand for land either up or down. Besides economic considerations, there is always a reason to sell or buy that may end up being more important than where land values are at during any given time.”
Farmers National Company experts suggest that during this time of relative market equilibrium, it is advisable to have a professional assist in the buying and selling process of land.
Reports from each of Farmers National Company operating regions, states can be read by clicking here.