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Farmland prices down 10-20% from highs

Farmland prices down 10-20% from highs
High quality farmland in South Dakota and North Dakota is now topping out at about $8,000 and $6,800 per acre, respectively, says Farmers National Company.

Land sales in North Dakota, eastern South Dakota and western Minnesota have remained strong this past year, according to Terry Longtin, Farmers National Company vice president and area sales manager in Grand Forks, N.D.

While prices are down 10 to 20% from a couple of years ago, land prices are still excellent when looking back over the past 10 years, Longtin says.

Sellers can expect to see notable buyer interest in their land, as long as it is priced right. Land prices are down though, mainly due to reduced commodity values in the past two years. However, land prices have gone down substantially less than the drop in commodity prices.

Farmland prices in North Dakota and South Dakota are down 10-20%.

There is a trend towards more private listings vs. versus auctions as compared to a year ago in the northern two-thirds of the region. Auctions have seen little success lately, as buyers prefer a behind-the-scenes purchase instead of bidding against their neighbor in a public forum, Longtin says.

"We see more buyer competition in the southern end of the region and auctions are working well there," he said.

Top quality land in South Dakota is drawing up to $8,000 per acre, while North Dakota's land prices are coming in at $6,800 and Minnesota at $9,000 per acre. 

Pivotal year
Nationally it may a may be a pivotal year for farmland prices, according to Randy Dickhut, vice-president of real estate operations for Farmers National Company.

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If farm and ranch income is low this year, it could impact the land market for several years, he says.

Current buyers are predominantly active farmers and ranchers adding land to their operations. If they aren't in the market in the future, land prices could remain flat or soften further.

However, interest from investment funds and individuals is on the rise, Dickhut says.

"With the softening of land values, some investors are looking at this as an opportune time to buy. Land is considered a low risk long-term investment, so we will see these types of buyers jumping into the land market more and more over the next several years."

Long-term economic trends look positive for land prices. Demand for feed grains and protein sources by China and other world markets remain strong. "Demand for our products creates a positive outlook," Dickhut says. "Any adjustments to values and sales activity are likely to be slow and steady so the impact won't be overwhelming."

National Company currently manages more than 4,850 farms in 24 states comprising over 2 million acres. The company has sold over 3,700 farms and more than $2.65 billion of real estate during the last five years.

Source: Farmers National Company

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