Are you feeling more positive about the direction of the farmland market? If so, you align LandOwner subscribers, according to our annual survey. (LandOwner is a monthly newsletter delivered to land owners and others across the U.S. Learn more about LandOwner.)
More than half, 52%, believe land prices will rise during the next three years. That is a significant shift from last year, which found 57% of you expected farmland values would decline during the next three years.
While the shift in attitude is major, subscribers are cautious about making an immediate purchase of farmland, which also aligns with what we’ve been hearing from farmland managers and other reports. For 2018, 31% of survey respondents say they intend to buy farmland within the next three years. That is down from last year’s 36%.
However, the number willing to consider a purchase has surged dramatically. Fifty percent of respondents marked “maybe” to the question: “Do you intend to buy farmland within the next three years?” That is up from 41% the past two years and is by far the highest reading for this category in the history of our survey. The previous high was 43% marked in 2015 and 2008. The low of 38% was set in 2007.
Stable to Higher Farmland Values
That positive view is reflected in your outlook for land values for the next three years—36% believe prices will rise by less than 10% over the next three years, 14% anticipate an increase of 10% to 20%, and 2% look for a rise of greater than 20%. Meanwhile only 16% now expect farmland prices to decline less than 10%, and 10% anticipate a decline of 10% to 20%. Only one respondent thought prices would decline by 20% or more, down from 8% last year and 10% in 2015.
While the survey shows improving optimism about land values, it also shows more of you do not expect prices to exceed previous highs in the next several years. Some 36% of respondents agree values have peaked, up from 27% a year ago. This year’s percentage equals the 36% recorded in the 2014 survey, when prices were coming off their highs notched in late 2012 and early 2013.
Respondents tempered their land purchases the past three years—a reflection of the correction in farm incomes and decline in the number of farms on the market. Some 47% say they bought farmland in the previous three years. That’s down from the 50% notched last year and the lowest in the history of the survey.
The peak of respondents saying they had acquired land was 55%, which was reported in 2014. The percentage has reached 49% four times (2008, 2009, 2011 and 2016).
The number of subscribers intending to sell farmland in the next three years rose slightly this year, reaching 6%. That’s up from 5% last year and 4% the year before. As usual, the No. 1 reason (30%) cited as why you would sell is to transfer ownership to a family member. At 16%, “a good time to sell” and “diversify investment” are tied as the second reasons for selling. The third most popular reason was planning to retire soon. This was marked by 10% of respondents.
Subscribers from 22 states provided intel for this year’s survey. Just under half of the respondents are actively farming. For those who lease their land, 34% use a cash rent agreement, while 10% do a crop-share lease.
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