When trying to understand where Ag land values are headed in 2017, several factors will come into play according to the latest from Farmers National Company and theirJanuary 2017 Land Values Report. In the past three years, agricultural landowners in most regions across the country have seen a decline in profits, which also pushed land values lower. However, questions abound when trying to formulate a picture of the future. Direction of commodity prices, interest rates, inflation, challenges in the world economy, weather and U.S. tax law — all these cards are in the deck. Buyers of Ag land are asking if it is an opportune time to make a purchase of a farm or ranch, while sellers are asking if the market dynamics are indicating that it is good time to sell land. For more insight on to where Land Values may be headed in 2017, let’s look at some of the regional findings from the 2017 report:
Michigan, Ohio, Indiana, Illinois, Missouri, Kentucky, Tennessee, Arkansas, Mississippi: Top quality land values in this region have held steady, while medium quality land has trended downward. In fact, most states in the region are seeing high quality land values hold fairly steady. During 2016, more private transactions occurred, but approximately 60% of transactions still were through auctions. Looking into the near future, there seems to be very little activity moving into 2017 at this time. With interest rates beginning to increase, the political movement completed and commodities fluctuating at lower levels, cropland values will be remaining stable to slightly trending lower during 2017.
Iowa: The second half of 2016 saw a jump in land auctions in the state of Iowa. Auctions continue to be the most successful approach to selling land in Iowa, with 97% of auctions resulting in a sale the day of the event. Top quality land remains stable with a possible five percent decrease. Medium quality land is experiencing a five percent decrease and low quality land is seeing a 10% decrease in value. Approximately 85% of buyers are local farmers and 15% are investors. Looking to 2017, a lot will depend upon how much land comes on the market. Current commodity prices indicate land values should be trending downward, but if we continues to see so few farms come on the market, prices will stay steady.
Kansas and Oklahoma: Land values in the two states haven’t changed much from mmid-year 2016. top quality land is still holding the same values if in the right location. Medium quality land has seen a slight decline of 5%, while poor quality land has been difficult to sell. Auctions remain the best method for moving medium to high-quality land. There has been a new wave of interest from investors. Farmers are still buying the “right” farm if it is available, something next door or a good addition to a current operation. Investors are looking at better values than the past three or four years.
About Farmers National Company: Farmers National Company is the nation’s leading agricultural landowner services company and manages more than 4,850 farms in 24 states comprising over 2.1 million acres. The company has sold over 3,700 farms and more than $2.65 billion of real estate during the last five years. Good folks, glad to help support them in their efforts!
This is just a small excerpt of the full Van Trump Report that I send out every day. To find out what you’re missing, sign up for a FREE 30-day trial.