Demand for quality farmland contributed to a stabilization in farmland values in 2017, according to Farm Credit Services of America.
“Overall real estate values have stabilized in the past year, but continued low profit margins and potential for an increase in sales activity could put downward pressure on real estate values,” said Tim Koch, FCSAmerica’s chief risk officer.
FCSAmerica compiles sales records and, twice a year, appraises 64 benchmark farms.
Key points from the FCSAmerica review:
- Sales of higher quality farm ground contributed to an uptick in average sale prices in 2017. Where prices dropped at local or regional levels, sales generally involved lower quality land.
- Average sale prices rose slightly in Iowa, Nebraska and South Dakota. Wyoming had too few sales to identify a trend.
- Iowa and Wyoming saw modest overall increases in real estate values in 2017, while Nebraska and South Dakota declined.
- Farmland values remain well below the market’s peak of three to four years ago. Overall, values are off about 20%.
The cooperative’s objective is to track real estate values without the influence of changes in land quality on sale prices.
The average state-by-state change in benchmark farm values through 2017. The number of benchmark farms in each state is indicated by parentheses.
A state-by-state look
Eleven benchmark farms saw an increase in value in the last six months of 2017, while 10 showed no change.
Overall farmland sales activity was down 20%. However, public land auctions increased 2% compared to the previous year. The percent of auction “no sales” fell to 2.7%, down from 3.2% in 2016.
Five benchmarks farms increased in value, while two showed no change. The remaining 11 declined an average of 6.1%.
Total sales declined in 2017, with dry cropland dropping 15% and irrigated 25% compared to 2016. Public land auctions dropped 16% and auction “no sales” increased to 5.2%, up from 2.2% in 2016.
Values were unchanged on 14 benchmark farms in second half of 2017. Three farms saw an increase and six declined.
Total sales were down 18% compared to 2016. Public land auctions were down 16% and “no sales” increased to 6.1%, up from 3.2%.
The one cropland benchmark farm increased in value by 5.1%. The pasture unit saw no change in value in the last six months of 2017.
Sales have been and continue to be very limited in Wyoming.
Source: Farm Credit Services of America