Several factors will come into play in 2017 that will determine the direction of land values. Randy Dickhut, senior vice president of real estate operations for Farmers National Co., says that in the past three years, agricultural landowners in many regions across the country have seen a decline in profits, which also pushed land values lower.

“This winter, questions abound as to the direction of commodity prices, interest rates, inflation, challenges in the world economy, weather and U.S. tax law,” Dickhut says.

"Buyers of ag land are asking if it is an opportune time to make a purchase of a farm or ranch, while sellers are asking if the market dynamics are indicating that it is good time to sell land. Depending on location, quality of land and other factors, our agents report seeing regions and local areas where land prices are stable or somewhat strengthening post-2016 harvest. Then there are other areas where land values have continued to decline.”

A key factor impacting land prices will be interest rates, Dickhut says. Grain and livestock prices affecting farm and ranch income also will influence land values.

“Foreign trade policy and its effect on agriculture will be closely watched over the next few months. Potential changes in tax laws could affect estate taxation and capital gains rules that in turn influence buying and selling decisions,” Dickhut says.

Kansas, Oklahoma outlook
Land values in these two states haven’t changed much from midyear 2016, reports Brock Thurman, AFM, vice president and area sales manager based out of Kiowa, Kan.

“Top-quality land is still holding the same values if in the right location,” he says. Medium-quality land has seen a slight decline of 5%, Thurman says, while poor-quality land has been difficult to sell.

“It could be down 50% from the top when it’s in poor condition and not in a good location. Location is key,” he says.

Thurman says he doesn’t anticipate significant changes in land values for the first half of 2017 and possibly beyond.

“High-quality land will remain stable, most likely due to investor money coming back into the equation,” he says. “Medium-quality land ought to remain steady for the same reason. Low-quality land will remain soft.”

Auctions remain the best method for moving medium- to high-quality land, Thurman says.

“We are using private and phone auctions on some tracts, and it appears to be working well,” he says.

Some privately sold land has been sitting on the market for extended periods of time, because it was priced too high, Thurman says. So far, there have been only a few tracts that didn’t sell.

“Conversely, approximately 95% of public land auctions close the day of the auction or the week of the auction,” he says.

The most active sellers to date have been absentee owners who were aiming for high-value peaks, but now simply want to sell before any perceived crash, Thurman says.

“We are seeing a new wave of interest from investors,” Thurman says. “Farmers are still buying the ‘right’ farm if it is available, something next door or a good addition to a current operation. Investors are looking at better values than in the past three or four years.”