Mike Pearson takes a look at the expected drop in farmland values and what farmers can expect the prices for land to do.

Land prices had a rapid rise over the past 5 years and many wondered where the ceiling was.

However, many auctions are now ending without a sale at all. So how will this impact prices in 2025?

Farmland prices increased more than 30 percent since 2022.

Experts at University of Illinois Department of Agriculture say they expect a decline of 3 percent in 2025.

This year, farmland sold for $9,550 per acre this year. But it's expected to fall to $9,265 per acre in 2025.

Such a decline does align with historical patters and survey results from farm managers-- they expect falling land prices in the next 12 months.

One factor is the rising interest rates and lower returns for rented land.

The price for cash rent in 2024 was $270 per acre-- a 4 percent increase over 2023.

However, an 8 percent reduction is expected in 2025-- the biggest drop since the 1980's in cash rental rates.

One factor is the interest rates-- they are mostly at higher rates compared to the past 10 year window. For those wanting to invest, it means it is increasing the opportunity cost to invest in farmland compared to other secure investments.

Farm Progress America is a daily look at key issues in agriculture. It is produced and presented by Mike Pearson, farm broadcaster and host of This Week in Agribusiness.

Related:Farm Progress America, Jan. 20, 2025