By: Marc Schober
Marc Schober is the editor of Farmland Forecast an educational blog devoted to investments in agriculture and farmland.
Banker survey shows farmland values are steady
Nov 18, 2009
Farmland values have stabilized across the Federal Reserve Bank of Kansas City’s Tenth District. Irrigated land, as well as pasture land, decreased in value approximately 1%, while nonirrigated land slightly increased in value during the third quarter of 2009.
In comparison to one year ago, nonirrigated land is down 1.7%, irrigated land is down 3.0%, and pasture land is down 4.2%. By the end of the third quarter of 2008, there had been a severe spike in values before they began to decrease in the fourth quarter of 2008.
The survey revealed that District farmland values have reached a nadir. Bankers stated that they think that farmland values should hold steady over the next three months. During the fourth quarter of 2008, farmland values decreased for only the third time in the past 100 years across the US.
Farmland sales have had a slow start during the typical selling season. “Real estate values have maintained with few sales occurring,” noted one banker from Southeast Wyoming. Although there were less sales, bankers feel that the demand for farmland is still solid, while farmland values continue to hold. As harvest has been dragged out much longer than expected in many parts of the US, land sales have been continually postponed.
Credit has remained tight in many areas of the Tenth District according to the 263 banks that were surveyed. Loan repayments have decreased again, now equal to six year lows, while loan renewals and extensions have increased to six year highs. Bankers assure that they still have funds available to loan to qualified borrowers.
The livestock sector continues to decline according to the survey results. On average, bankers estimated that livestock incomes would decline about 10% below last year’s levels on high supplies of meat and still relatively high input costs.
Farmland proved it can retain its value during hard economic times. It is reassuring to see that nonirrigated farmland values held steady during the third quarter of 2009, compared to a decrease of nearly 1.5% during the second quarter of 2009. Bankers forecast that farmland values will continue to hold steady through the end of 2009 as well, creating a perfect time to invest in farmland.
Read more about agriculture and farmland at farmlandforecast.colvin-co.com.