Courtesy FarmersNational.com
Kansas and Oklahoma
The market for high quality cropland has leveled off throughout the South Central Plains. Buyers are discriminating on marginal to lower quality land due to reduced commodity prices. This is especially true in areas that use irrigation and are experiencing a decline in water levels.
Values remain historically strong overall and high quality land is still bringing top dollar, according to Brock Thurman, AFM, Farmers National Company Vice President and Area Sales Manager, Kiowa, Kan.
“Demand from operators looking for higher quality land for expansion is still high,” said Thurman. “The market remains strong at this point.”
Sales prices for properties with mineral rights and active production remain steady. In addition, positive crop production levels or profitability boosted by crop insurance receipts are also keeping values at high levels. Values remain tied to land quality and location.
Prices for irrigated high quality cropland in the area are variable, but range between $3,300 to $5,000 per acre in western Kansas and $6,000 to $12,000 in northeast Kansas, while the range for non-irrigated land is $2,500 to $4,800.
Iowa and Minnesota
Land values appear to be trending downward in specific areas of Iowa and Minnesota, according to Sam Kain, National Sales Manager for Farmers National Company, West Des Moines, Iowa. Most of the recent changes have occurred in the last 45 to 60 days.
“It is really hard to get a handle on the change in land values as some areas still tend to be very aggressive,” said Kain. “With the outlook for lower commodity prices in 2015, I think we may have hit the top in the land market for a while,” said Kain. “However, with fewer properties for sale it remains to be seen if a downward trend will be long-term.”
Land is a long-term investment for most buyers, farm owners who want a property that is being sold know they may not get a second chance to buy it within their lifetime. If they want that property they need to aggressively try to purchase it or they may miss the opportunity to ever own it.
In Iowa, top quality land is selling at more than $11,000 per acre, while Minnesota values are reaching $9,000 per acre.
North Dakota, Eastern South Dakota and Western Minnesota
Auction activity for land sales in North Dakota, eastern South Dakota and western Minnesota continue to tighten when compared to 2013, with more transactions going to private listings, according to Terry Longtin, Farmers National Company Vice President and Area Sales Manager, Grand Forks, N.D.
While there are still buyers, sales levels have weakened a bit overall, with levels coming in at 10 to15 percent below the high values of 2012 and 2013. The private listings are working much better as buyers prefer a behind the scenes purchase, versus bidding against their neighbor in a public forum.
“I feel we are at a stabilizing place in the market,” said Longtin. “For people wanting to sell, prices are still excellent, even if they are slightly down from a year ago. Our region’s agricultural economy may be a bit weaker than other regions due to lower commodity prices, a high basis due to railroad transportation issues and average production levels in 2014. Overall though, sellers are still seeing historically high price levels.”
Average to good quality land in the area is selling in the $4,000 to $6,000 per acre range, while excellent land is in the $6,000 to $8,000 per acre range. Top quality land in South Dakota is pulling up to $8,100 per acre, while North Dakota is coming in at $7,200 and Minnesota at $9,000.
Colorado, South Dakota, Nebraska and Wyoming
During 2014, the wide region covering Colorado, western South Dakota, Nebraska and Wyoming saw continued land sales activity. While land values have not increased significantly, they are still at a steady high level, said JD Maxson, Area Sales Manager for Farmers National Company, North Platte, Neb.
Demand for high quality crop ground coupled with current commodity prices still remain the motivating factors driving land prices. Sellers currently are concerned about long-term commodity prices and buyers are less willing to pay top price. Although land prices have stabilized throughout 2014, most noticeably in the fourth quarter, farmers, owner/operators and investors are still focused on acquiring additional acres.
“The majority of our buyers and sellers have adjusted their expectations in light of lower commodity prices and are more realistic when looking at the bottom line,” said Maxson. “Recent sales and continued buyer demand have reinforced the strength of the land market, which should continue into 2015.”
Recent land auctions since September confirm that buyer demand remains strong for high quality cropland, as prices in this area have reached all-time highs. Auctions scheduled in 2015 will drive the land market values in this region.
“Medium to below average farms are selling at 10, 15 and 20 percent below 2013 prices in specific locations across Nebraska,” said Maxson. “Renewed confidence in the stock market and financial markets may begin to have an impact on land prices. We may see a transition of wealth away from agriculture as investors adjust to favorable increases in returns on alternative investments; however, I don’t foresee a sharp decline in ag land values.”
Prices in this wide region are ranging from $4,500 to $12,000 per acre for high quality tillable acres, with location, soils and topography dictating price.
Prices in this wide region are ranging from $4,500 to $12,000 per acre for high quality tillable acres, with location, soils and topography dictating price.