Ag Industry Adjusting Land Values
Buyers are wondering if now is a good time to make a purchase. At the same point in the market, sellers are asking if they should sell. Individual landowners and investors are scratching their heads to the land market and where it might go, so we outline a few regional areas and their value reports:
Iowa saw less land being sold last year than normal. This continues the trend down from the high number of transactions experience of several years ago.
“During 2017, Farmers National Company agents sold 20 percent of the land in Iowa, which is through a brokerage firm. This is a testament to each of our agent’s dedication in meeting the seller’s needs and understanding the local market. Farmers National Company’s comprehensive marketing efforts bring full exposure to all potential buyers, which brought about all those successful sales,” said Sam Kain, area sales manager for Iowa.
According to Kain, prices for good quality land are steady to trending a bit higher. Lower quality properties are five percent lower when comparing to the past six months.
Ag lenders stay cautious in their outlook as the lower farm incomes of the past few years put pressure on the financial condition of borrowers. The expectation is that there may be additional financially encouraging sales coming.
Illinois, Indiana, Ohio, Michigan, Missouri, Arkansas
The eastern Corn Belt states continues with the trend of loss of land.
“The market is basically stable,” said Roger Hayworth, area sales manager for this region. “Except for Michigan where Farmers National Company is in the process of selling 14,000 acres for one owner; overall, there is less land on the market than average.”
Prices for good quality tillable acres are steady. Lower quality land is steady to slightly lower as there is less demand.
Those selling land are mostly trusts and beneficiaries. Very few sales from farm operator financial stress are being seen. Farmers and local investors buy most of the quality cropland that comes up for sale.
“We believe buyers are being more cautious right now in making large purchases. In Michigan, Farmers National Company has experienced strong interest in the farms that we have sold to date. Our agents in Michigan report good interest in the cropland that hasn’t been on the market for a while,” Hayworth said.
North Dakota, South Dakota, Minnesota
Surprisingly, land prices in the Dakotas and Minnesota are good compared to low commodity prices.
“Prices for good quality cropland are as good as a couple of years ago,” said Brian Mohr, area sales manager for the region. “The somewhat slower overall land market in our region is mainly due to fewer farms and ranches for sale, especially in western South Dakota.”
Prices for average to lower quality land are fairly stable to down compared to a year ago. All this while buying interest for good quality farms helps bring better prices than anticipated. The primary sellers of ag land right now are family trusts and inheritors of the property.
Knowing the land market in any given area is extremely important whether buying or selling.
“Our agents are working closely with sellers so that they know the true value of their farm or ranch in the marketplace, and they understand the best way to sell the land based on local experiences. Farmers National Company has multiple methods for selling land and our agents look at the market and the needs of the seller to determine how to sell the property to get the best price,” Mohr said.
Nebraska, Kansas, Oklahoma, Texas
Values across the Southern Plains range from stable to down 10 percent compared to last year.
“High quality land is selling well,” said Paul Schadegg, area sales manager for this region. “Farmers who are in good financial condition are by far the main buyers of high quality land that comes up for sale. Investors are also in the market to buy when the right property is available.”
Currently, Schadegg is seeing a mix of sellers in the market with beneficiaries being the most prevalent.
“A few investors are deciding that it is a good time to sell and we are seeing a small number of land sales by an operator’s financial stress. We believe there will be additional stress sales later in the year,” he said.
Interest in agricultural land in eastern Washington continues to be strong.
“Our sales volume is up 15 percent comparable to six months ago. We are seeing good buying interest as more investors are searching the market for properties,” said Flo Sayre, broker for Farmers National Company in Pasco, Washington. Prices in the area are mostly steady from a year ago and vary.
“Good fruit potential land can sell for up to $16,000 per acre while dry rangeland can sell as low as $350 per acre,” Sayre said.
Current sellers of land in the area are investors with small tracts. the customary estate and beneficiaries, and a few producers want to alleviate cash flow stress. Sayre has not seen any financially forced sales yet. Rising interest rates will challenge land prices in the upcoming future.
Based on many years of experience in the agriculture of eastern Washington, Sayre noted that “due to the wide range of crops grown in the region and the critical importance of water, our agents work very hard to provide the best information possible to buyers and sellers of land so that they can make good decisions.”