Farm and ranch real estate values remain very strong in 2005, according to a recent survey of professionals at Farmers National Company. Results from over 300 private treaty sales and auctions at FNC have been at or above the record sales prices we recorded in 2004. High quality farm ground has been in the highest demand by both investors and farmers. Sale prices of $3,500 to $5,000 per acre are common in the central and eastern cornbelt, with prices of $2,500 to $3,500 per acre in the western cornbelt.
Lee Vermeer, AFM, Vice President – Real Estate Operations, reports: “Demand for recreational properties with hunting and/or fishing also has continued. Properties with waterfowl hunting opportunities have seen the highest buyer activity, particularly if they are within one to two hours of a large metropolitan area.”
“Investors have continued to be major players in the market as they look for alternative investment opportunities,” according to Vermeer. “Stock market uncertainties continue, as do low interest rates on fixed rate investments, causing investors to look for diversified investments. Sellers of land for development purposes who wish to defer capital gains taxes on those sales are purchasing farms and ranches utilizing the 1031 tax deferred exchange option. They are very strong competitors in the market for all types of land.”
The following comments are provided by Farmers National Company Area Sales Managers from around the country:
Ron Sabata, North Platte, Nebraska: The demand for farmland, ranchland, and individual tracts of grass remains strong with buyers out numbering sellers. The current interest rates, government programs, water usage issues, and the drought have not diminished buyer demand. Pressure from outside investors has added to the urgency of local owners to buy and leading to record prices in some areas. As farms and ranches continue to grow larger, the demand is likely to remain high in the near future. Land values range from $300 to $420 per acre for grassland. Non-irrigated cropland ranges from $350 to $900 per acre. Irrigated land is running from $1,200 to $1,700 per acre. Industry estimates are that land values have increased from 20 percent to 25 percent in the past five years.
Monty Meusch, AFM, ALC, CAI, CES, Omaha, Nebraska: The demand for land in the western cornbelt and High Plains has been explosive over the last 12 months with values approaching or exceeding previous market highs in many areas. The strong buyer interest has been fueled by limited amounts of land for sale, historically low interest rates, 1031 tax deferred exchanges, favorable crop yields across the Midwest, and a strong cattle market. Today's land buyers appear to be a mix of expanding farmers and ranchers along with investors desiring an investment alternative providing a steady annual return and asset security.
Top quality farmland in western Iowa and eastern Nebraska is selling in a range of $3,000 to $4,000 per acre, while better quality cropland across northern Kansas is in a range of $1,200 to $2,500 per acre, depending on location and if the land is irrigated. Western Kansas non-irrigated land is currently trading in a very active range of $500 to $800 per acre. Southwest Kansas irrigated land, depending on water availability, is selling in a broad range from $900+/- per acre to as high as $1,500 per acre. Grassland is in very high demand with land in the Kansas Flint Hills trading in a range of $650 to $1,000 per acre based on location, water resources, and improvements.
Joe O’Kane, AFM, Clinton, Illinois: Indiana and Illinois land values have remained strong through the second quarter of 2005. High quality soils in central Illinois are still commanding $4,500 to $5,000 per acre. Northeast Indiana has seen quality farms top the $4,000 per acre mark. Money from 1031 tax deferred exchanges continues to push the local buyer to higher levels. Lower quality farms are reflecting 20% to 30% price increases from levels of five years ago. Disposable income from urban areas continues to support the recreational land market. It seems someone always wants the non-income-producing property for building sites, hunting, or other leisure activities.
Sam Kain, ALC, GRI, Des Moines, Iowa: Activity continues to be very good in the Central Area with seven auctions booked for June and three pending for July by FNC real estate agents. Land prices for quality farms are still very strong with several sales topping the $4,000 per acre mark. The hunting and recreational land market continues to be very hot with sales in the $1,500 to $2,000 per acre range for land that is generally non-tillable. We have more demand for land than we have listings available.
Harold Fitts, Senior Mid South Farm Manager, Jonesboro, Arkansas: Farmland prices remain strong in the Mid South area. Buyer demand continues to out pace the available supply. Recent northeast Arkansas and southeast Missouri sales have ranged from $2,000 to $3,000 per acre depending upon the level of irrigation development and associated USDA/FSA crop bases. The southeast Arkansas and Mississippi Delta area sales of sandy loam soil types have ranged from $2,000 to $2,500 per acre, while improved clay soils prices have ranged from $1,250 to $2,000 per acre.
Serving America’s Landowners Since 1929, Farmers National Company, an employee-owned company, is the nation’s largest farm and ranch management and real estate brokerage company, offering landowners and investors a full line of management services including real estate sales, consultations, insurance, appraisals, oil and gas management, conservation and recreation services, and mapping technology. Services are offered in 22 states throughout the Midwest and Mid South.