By Tyne Morgan and Sara Schafer
Record farmland sales stole headlines throughout 2022. Will 2023 be a repeat in market strength?
“We’re coming into 2023 similar to what we did 2021, where we’re cautious about where this land market is going,” says Paul Schadegg, senior vice president of real estate operations at Farmers National Company. “I don’t think it’s going to drop out of the sky, but I think we’re going to see some kind of a settling of values.”
Last year, the main market drivers were strong commodity prices and not enough farmland supply to meet buyer demand. How these trends adjust will determine the prices at auction.
“Based on what we know now, values should hold firm or rise 5% in 2023,” says Mike Walsten, contributor for LandOwner. “Assuming commodity prices decline in 2024, we look for a correction in values in 2024 to 2026.”
Not all properties will command strong prices in 2023, Walsten says.
“There will be ‘no sales’ at some auctions as some sellers take their land to the market with unrealistic price expectations,” he says. “That occurred at the end of 2022. Lower quality farm properties will likely require a longer selling period and potentially markdowns in price.”
That action is normal, Walsten says, as the market resets after a sharp price run up.
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