Mike Boehlje looks at land prices today and isn't afraid to say what he thinks. The long-term Extension ag economist and farm owner himself doesn't think today's land prices are sustainable long term.
"Land values are overpriced," he says. Boehlje is an eg economist at Purdue University.
"That's being blunt but that's the truth. I think the decline over the next three years in land values may be as much as 15%. Some don't think it will be that much," he adds.
You can also read reports from people who think crashes will crash, much like they did in the early 1980s. Boehlje is not in that camp.
"I think we're going to have a softer landing this time," he says. "There are things that could go wrong to make it worse, but right now we don't see those happening."
Normally Boehlje says a measure of where land prices are is the ratio of price of land to earnings. Many times economists believe things are fairly well in balance if the ratio is about 15 or 20 to one. Land price is about 15 to 20 times what it can earn in one year.
In the late '70s it reached about 20 to 1, he says. Then when land prices fell, it dropped to about 12 to 1. Today, it's about 30 to 1, meaning the price of average land is about 30 times the value of what it will earn in a year. He believes that such a value is too high and not sustainable over the long term.
"I'm not pessimistic about agriculture in the short term," he says. "I'm actually optimistic. It's the short term – the next three to four years – that concerns me. Things may not even be that tight in 2014. It's 2015 and 2016 when things may get really tight for farmers."