What is in this article?:
- Western farmland values leap as urban prices tumble
- Leveling of values
- Western states like Arizona and California are reporting more land is being utilized for farming.
- Since 2006, USDA figures indicate land values in rural America have jumped by 20 percent or more.
- "It would be fair to say there is a farming renaissance under way as available crop acreage is in high demand,” says Dr. Charles Gilliland, research economist at the Texas A&M University.
Leveling of values
But he warns that a leveling of commodity prices will result in a leveling of rural land values as well, and says a softening of market prices “is inevitable.”
Brock says rural land values in Texas have not increased as much as in western states but says the market remains “healthy.” He says the drought in Texas has affected land values but it has not weakened them, and says land values in the state remain steady.
Adding to rural land values in Texas is a return of agriculture to acres that had once been dedicated to urban expansion. The housing crash and tighter investment markets have slowed urban expansion and prompted rural development, and those capable of building in suburbia are trending toward more rural areas where they can generate land revenues through small farms and ranches or by establishing specialty crops. In a few instances, rural operations of less than 100 acres have included horse stabling and pasturing operations and hunting leases.
In spite of floods, wildfires and droughts, USDA statistics indicate net farm income nationwide is forecast to rise by 31-percent this year to just over $103 billion, and some economists say this could contribute to a growing interest in both commodity and specialty crops.
Statistical trends may provide a glimpse into farming’s future, but statistics can support most any argument Gilliland says. While rural land values remain high and more land is being dedicated to agriculture, it is also true that for the first seven years of the last decade farmland values fell by nearly 2 million acres. In contrast, since 2008, farmland acres have leveled off and remain steady at about 920 million acres.
Brock warns that the prime time for grabbing up rural land for crop production is slowly passing as markets soften. But Gilliland says while rural land values may soon trend downward slightly, rural real estate remains a good investment for those able to add to their total acreage.