What is in this article?:
- Farmland demand hits record high as listings drop to historic low
- Colorado, Kansas, South Dakota, Central/Western Nebraska and Wyoming
- Demand for U.S. farmland has jumped to a five-year high, spurred on by a profitable grain market and a boost in buyer interest from both farm operators and land investors. While demand rose sharply during the last quarter of 2010, the supply of available farmland fell to historically low levels.
Colorado, Kansas, South Dakota, Central/Western Nebraska and Wyoming
The western region of the farm belt is currently seeing more of a demand for quality land than ever before, reported JD Maxson, area sales manager for Farmers National Company in Colorado, Kansas, South Dakota, central/western Nebraska and Wyoming. "With the volatility of the stock market and CD rates historically low, I'm not looking for a farmland market correction any time soon," Maxson said. "In my opinion, investors will continue to look at land as a hedge against inflation and a sound investment tool with a proven rate of return. Our clients' lack of confidence in the financial markets, along with the current CD and interest rates, is reducing motivation to put retirement funds on deposit."
Buyer demand for high quality property continues to increase as sellers' inventory continues to shrink. According to Maxson, recent land auctions have been well attended with active bidding at 10-15 percent above market value. Local owner/operators are winning the bulk of the bidding.
High commodity prices and continued global demand for protein are currently driving the market, according to Maxson. "Land prices show a definite variation with location and quality as key indicators," he said.
Sale prices of irrigated cropland throughout central, eastern and western Nebraska vary greatly depending on access, location and water, according to Maxson. For example, wet pivot acres range from $2,500 per acre in western Nebraska to $6,000 - $6,500 per acre in central and east central Nebraska. At a recent land auction property sold at more than $8,000 per acre.
Looking at western Nebraska, prices range from $500 - $650 per acre for average cropland to $1,850 per acre for land in the east river area of South Dakota, with irrigated land in southeastern South Dakota averaging $6,500 per acre, said Maxson.
Illinois, Indiana and Ohio
There has been a sharp increase in land transfers in the eastern region of the farm belt late in 2010 reports Roger Hayworth, area sales manager for Farmers National Company in Illinois, Indiana, Ohio, Michigan, eastern Kentucky, and eastern Missouri. Strong commodity prices, historically low interest rates, a profitable harvest and other factors have driven land prices up as much as $500 per acre during the last quarter in some areas.
Prices in Illinois, for example, are coming in at $7,000 per acre on average for high quality land, and as high as $8,750 in certain parts of the state. Mid to lower quality property is selling at $4,500 per acre. Values in Indiana are up to $7,500 per acre, while those in Ohio are up to $6,300 per acre.
"We have seen record values in pocket areas, with aggressive activity on high quality soils," said Hayworth. "The sale of mid level quality properties has also remained steady with some increase, while low quality and recreational land has been stagnant at best."
Desire for quality land has boosted activity at land auctions as potential buyers become increasingly competitive. "We have seen attendance rise at auctions, with buyers determined to purchase," said Hayworth. "If the land meets their needs as far as soil quality and location, they become very competitive to get what they want."
Arkansas, Mississippi and Tennessee
According to Keith Morris, area sales manager for Farmers National Company in Tennessee, Mississippi, Arkansas, Alabama, western Kentucky, Louisiana, and southern Missouri, the southern region presents some great values in land at present.
"If you're looking for good buys and values on all types of properties, the south is where to look," said Morris. "Even though high grade precision leveled farmland is hard to find, you can still buy it for $3,000 to $3,500 per acre. Some high grade cotton ground, with class one soils, has moved up a little higher with some reports of over $4,000 being paid per acre. That was expected, based on record cotton prices."
Less than optimum farmland is going for $2,300 to $2,800 per acre in most locations, said Morris. He reports that recreational buyers in this region can get a bargain. "On some rural properties that have been harvested for timber, you can find buys under $1,000 per acre," said Morris. "However, most recreational properties range from $1,400 to the low $2,000 range throughout the region. I don't think the price will continue to drop, as buyers are starting to look again for that special weekend spot." The market for loans for these types of properties has tightened, he added.
Prices for top land are averaging $3,250 per acre in Arkansas, $3,000 per acre in Tennessee and $3,500 per acre in Mississippi.
For more information on land listings in your region, visit the Farmers National Company website at www.FarmersNational.com.