The highs & lows of current land values

Want to expand your operation? Depending on where you live, there may be some prime opportunities to purchase land in the coming months.

Amanda Radke

August 7, 2017

2 Min Read
The highs & lows of current land values
Amanda Radke

Land — God sure isn’t making more of it. In the last decade, we’ve seen land prices escalate as commodity prices soared. However, as farmers are facing several years in a row of sluggish prices, land prices in many places are following suit.

Of course, that doesn’t apply to every place in the U.S. The entire West Coast, from Washington all the way along the southern border to Arkansas, is trending upward, but there are some interesting opportunities for folks looking to expand their acres in the Corn Belt and throughout the Midwest.

Recently, Bloomberg News released the 2017 Cropland Value by State, which compares dollars per acre and percent change of land values from 2016.

Featured on Ag Update, Bloomberg News’ Alan Bjera and Dominic Carey write, “Average farmland values nationwide have risen 2.3% to $3,080 an acre so far in 2017, according to an annual report released Aug. 3 by the USDA. That gain, which erases last year’s decline of $10 per acre, is mostly due to increases in the value of buildings and land put into non-agricultural uses. State-by-state, however, the picture is varied.”

For example, California saw the largest gain, up 10% to $8,700 per acre. Meanwhile, my home state of South Dakota dropped 3.1% to $2,180 per acre.

According to the article, “Farm income may slump for a fourth straight year, meaning less capital is available to spend on land, said Nathan Kauffman, an economist with the Federal Reserve Bank of Kansas City. Rising interest rates are also pushing down sales prices and making some farmland less attractive to outside investors, he said. Still, with some signs of commodity prices bottoming out, stability is returning in some regions.”

Related:Pasture values outpace struggling cropland

Most of the sales are farmer-to-farmer, write Bjera and Carey, and farmland is still a great long-term investment as it generates cash flow and there is only so much of it available.

I wish I was sitting on a pile of cash right now, so I could take advantage of the lower prices in South Dakota. If you are in a position to purchase some ground, now might be a good time to look into it, if you farm or ranch in one of the states trending downward.

View the map and the percentage of change state-by-state by clicking here.

The opinions of Amanda Radke are not necessarily those of or Penton Agriculture.

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