High-quality Land
Still Bringing Top Dollar
A recent report by the Federal Reserve Bank indicated farmland values have risen at their fastest pace since the 1970s, but following a crest in late 2008, values have since stabilized.
While this analysis focuses on all classes of land, real estate experts are seeing sales of high-quality land exceed many sellers' expectations. Farmers National Co., an agricultural real estate and farm and ranch management company, reports sales of some high-quality land topping the expected price by as much as $2,000 per acre. Sales with lower-quality land or recreational property have not fared as well in recent months.
"In a general sense, land prices for high-quality land are stronger than they were nine months ago," said Lee Vermeer, AFM, vice president of real estate operations at Farmers National Co. "What our field staff is reporting is that high-quality land in a good location is still bringing top dollar and in some cases beyond top dollar. On the flip side, lower-quality land is down by as much as 15%, and we are seeing very few sales in the recreational land category."
Vermeer says one factor driving prices is the lack of land available to purchase. Because of the profits farmers have been able to generate the past several years, their cash reserves have grown, allowing them to build upon their current land holdings. However, producers wanting to expand their operations are seeing very few opportunities to purchase. When a parcel does hit the market, bidding can be aggressive, pushing per acre prices upward.
"We look for the land market to continue its strength into 2010," Vermeer said. "Competition will remain heavy for high-quality land in almost all areas from both farmers and investors. It appears investment funds continue to remain bullish on commodities, keeping grain prices at profitable levels. Input costs have dropped significantly for 2010, increasing the opportunity for profit for most grain producers."
For more information on land listings in your region, visit the Farmers National Co. web site at www.farmersnational.com.
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