When Farmland Auctions Ignore Price Trends

February 19, 2016 07:00 AM
When Farmland Auctions Ignore Price Trends

The headlines have been consistent – farmland values have been trending downward for several years.

“Lower grain and livestock prices are a major factor in the current measured decline in land values,” according to Randy Dickhut, vice president of real estate operations for Farmers National Company. “As net farm income continues to fall from the 2013 peak, we expect to see this trend in many agricultural regions of the country.”

Dickhut predicts price stabilization in 2016, due in part to lower-than normal supply of farmland for sale. And values remain higher than they were 5 to 7 years ago, and should continue to be a positive long-term investment, he says.

Local specifics still can easily override any regional or national trends, adds R.D. Schrader, president of Schrader Real Estate and Auction Company, citing recent examples in Illinois and Ohio.

In two separate Illinois auctions on Feb. 16-17, 241 acres sold for $11,574 per acre in Shelby County, and 271 acres went to three separate buyers for an average of just under $10,000 per acre. Another auction on Feb. 17 in Henry County, Ohio, saw 77 acres of farmland sell for $8,370 per acre.

“I can’t overstate the response and the intensity of the competitive bidding we saw,” Schrader says. “We’re seeing some results that you wouldn’t expect based on some of the commentary and forecasts I’ve been seeing. Nobody can predict what’s ahead, but the reality we’re seeing on the ground is that farmers and investors alike see farmland as a good long term investment.”

Land might also look favorable when compared to volatile stock market investments or near-zero returns on CDs, Schrader says.

Read the latest news on farmland prices and trends, find land for sale, and list your land at www.agweb.com/farmland

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Spell Check

Allan Bentley
Neligh, NE
3/22/2016 11:02 AM

  Wait, a real estate company is trying to say that farmland values are not going down? Of course that is what they are saying. I remember watching a realtor on fox news say that they see the housing market not only stay strong but get stronger right before the crash. A salesman is a salesman. Whatever they have to sell is worth a lot. It is their job to prop up the price of what they have to sell.

Waverly, IA
3/29/2016 06:16 AM

  Well put Kirk. When things get tough we tend not to focus on the 40 year vision of being a farmer. Sure can be a challenge some years.

Kirk Ellis
Hardin , MO
2/20/2016 07:38 PM

  Land is a great investment and always has been the more farms you own the easier they are to buy. Land has always been priced over what you thought you could pay for it and make it pay but in 10 years or so it looks like a smart buy. 25 years later you wander why you didn't buy more. Just have to work hard, manage smart and enjoy the ride. When you are young it is an uphill climb but when you get old it is all down hill and you look back and wish you were young again and behind the 8 ball. Being smart and working hard and taking care of your money is always a smart think and land has always been a good investment, you just need to know what you can handle and not get too wild until you establish a good solid base.


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