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Serving: West
For Sale sign on farmland
LISTINGS UP: More ‘For Sale’ signs are going up on farmland across the 28 states serviced by Farmers National Co.

Land market is ‘holding its breath’

Landowners, lenders and producers are watching to see how high interest rates will go.

Brian Mohr, area sales manager for Farmers National Co., says he is seeing increased land sale activity in North Dakota, South Dakota and Minnesota. “We are getting more calls about selling land and are handling more sales. Activity has definitely picked up from a few months ago,” Mohr says.

Across the 28 states served by Farmers National, land for sale is up 21% over the same period last year, the company reports.

Prices for good-quality land in the Dakotas and Minnesota have been fairly steady in the past year as there has been good demand for the few farms that came up for sale, Mohr says.

But Mohr now sees some challenges in the land market.

“I am concerned that the enthusiasm of buyers is waning somewhat, which could soften our land prices,” he says.

Questions looming
Randy Dickhut, senior vice president of real estate operations for Farmers National, says some important questions are looming about the land market

“Even though the rate of bankruptcies and forced land sales is low, there is the expectation that numbers will increase somewhat in the year ahead as farmers’ cash flows are stressed,” Dickhut says. “There is also an increase of quiet sales to neighbors or investors where the land is never exposed to the market to see what the true price is. The ultimate question here is how many more properties for sale can the market handle before the volume overwhelms the number of buyers and puts downward pressure on land prices.”

Factors outside agriculture are hanging over the land market and may have a further effect on values. Landowners, lenders and producers are watching interest rates and wondering how high they might go. Higher rates not only affect borrowing costs, but also influence capitalization rates for land investors. Those in agriculture are concerned about the current trade issues and if there will be lingering effects.

On the positive side, investors, both small and large, continue to be interested in owning agricultural land for the long-term, Dickhut notes. 

“The overriding question in the land market is about supply and demand,” he says. “At this time, there are enough buyers at most sales to bid up the price to a good level for the seller. But as we move ahead over the coming months, will buyers become even more cautious than they are now while at the same time will we see more land come up for sale for various reasons? All of this is why those involved in the land market, from owner to lender, are holding their breath to see what comes over the next year.”

Source: Farmers National Co., which is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.
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