Strong Farm Incomes Hold Land Values in Check

Positive income results for farms, combined with a tight land supply, buffered economists’ previously projected downturn of farmland values, according to Farmers National Company, a farm and ranch real estate company.

Farmers National recorded strong real estate sales for the first half of 2014, down somewhat from record sales experienced in 2013. It reported that aggressive marketing by the company’s agents and strong demand for land propelled this year’s sales.

“The land market is stable, despite projections that farm income and land values would drop,” said Randy Dickhut, AFM, Vice President of Real Estate Operations of Farmers National Company. He added that farmland values did not drop significantly, as anticipated, and farm incomes were stronger than expected going into 2014. Income projections of 20% below last year were not realized.

While land values nationally are down only slightly or are stable, Dickhut said values overall remain historically strong. The northern plains area experienced the most softening of land values due to weather conditions and lower commodity prices last year. Still, good quality farms sell well as demand continues from buyers. In contrast, the delta region has experienced land value increases of 13% due to good crop production.

“The 2014 outlook for farms remains positive,” said Dickhut. “Farm owners continue to search for high-quality land to expand their operations. I think economic forecasts overrated the demise of the U.S. land market. Things didn’t fall apart, but instead held steady and strong. Profitability for operations helped to ultimately keep property values strong.”