Farmland values in southwest Minnesota declined 6% in the first half of 2017, according to a survey conducted by David Bau, University of Minnesota Extension educator. The survey pegs the average value of an acre of southwest Minnesota farmland at $6,340. The survey looks at sales of bare farmland to non-related parties during the first six months of 2017 and covers a 14-county area. The survey has been conducted continuously for 23 years.
This year’s decrease is the fourth straight decline since values peaked in 2013. The region saw values decline 10.1% in 2014, 8.9% in 2015 and 2.6% in 2016. In total, the average value of southwest Minnesota farmland is down 25% from its 2013 high.
Values in the 14-county area historically rise 1% to 2% per year, Bau notes. However, in the eight years before 2014, prices increased at an annual rate of 15.3%. Values surged 33.2% and 35.6%, respectively, in 2012 and 2013 before declining in 2014
For 2017, prices decreased in eight counties and increased in six. Counties that saw year-over-year gains include Chippewa, Cottonwood, Jackson, Lac qui Parle, Redwood, and Yellow Medicine. There was a lot of variability in the numbers from 2016 to 2017, Bau notes. The largest increase was in Lac qui Parle County with a gain of 22% while Rock County saw the largest decrease of 29.8%.
Rock County had the highest average sale price of $7,545 per acre, and Lincoln had the lowest at $4,415 per acre. The average Crop Equivalency Rating (CER) for the 14 counties was 69 with the highest price per CER in Chippewa County at $101.20 and the lowest in Lincoln County at $76.12 per CER.
For the third year in a row, the assessed values were higher than actual sales price with the assessed value at 103%, Bau notes. Historically the assessed value would be 75% to 80% of the sales value. Nine counties experienced average sales prices that were lower than the assessed values in 2017, and five counties experienced sales prices that were more than the assessed values.