Prices paid for Illinois farmland have slightly declined in the first half of 2017. Sales activity is also flat, according to a survey by the Illinois Society of Professional Farm Managers and Rural Appraisers (ISPFMRA).
Excellent quality land showed only a slight drop of 1.6% in the first half of the year, reports the University of Illinois’ Gary Schnitkey, who conducted the mid-year snapshot survey of ISPFMRA members. Good quality land dropped in value by 3%, while average quality land declined 3.8% and fair quality land fell 4.4%.
“Most respondents indicate this trend will continue through the balance of the year,” Schnitkey says. “Our members tell us the volume of farmland being sold in the first half of 2017 was the same as the last half of 2016 and they see no change in that level of sales activity.”
Cash rent prices are following suit with the small declines seen in farmland values. “Respondents expect slight decreases in rents going into 2018, reflecting the same trends as land values changes by productivity class,” says David Klein, managing real estate broker for Soy Capital Ag Services in Bloomington, Ill.
The average expected decline for Illinois cash rents is $8 per acre. This decrease stems from expected lower yields and corn prices expected to average $3.66 for 2018.
As for farmland returns, respondents expect them to decrease in 2017 as compared to 2016. Nearly 30% of respondents predict returns will decrease between $25 and $50 per acre, while 43% expect returns to decrease between $1 and $25 per acre. Around 20% expect returns to remain the same.
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