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How Much Land Buying Capital is in the Marketplace?
You are here:   Blog  »  Agricultural Real Estate  »  How Much Land Buying Capital is in the Marketplace?

October 22, 2018 

 

In polling Farmers National Company's Area Real Estate Sales Managers this week, several observations on the land market consistently came up. One was that there is a bit more land for sale now compared to last year at this time. The second observation was actually a question asked throughout the company's footprint. Is there enough capital or purchasing capacity to buy the land that is coming up for sale?

No one really knows the answer to this question. We do know that the lower farm incomes of the past few years has put pressure on producer's cash flow needs. But, the historically high profits of the previous years helped build cash and land buying capacity for many. Some farmers have made land purchases this past decade and others have saved their cash and borrowing ability to make the key land purchase when it becomes available. Overall, 1% or less of U.S. farmland comes up for sale in the open market in any given year, so whenever a good farm comes up for sale in an area, there will be buying interest from local producers no matter the position of the farm economy.

Besides farmer interest in buying land, there are also investors who buy land as a part of their portfolios. This can be individual investors or investment funds depending on the state. Investors typically have cash or the financial well-being to make land purchases without the same concerns as farmer buyers. Investor interest in farmland has picked up this past year as the land prices stabilized at lower levels than in 2013. As we finish out 2018 and move through the winter sales season, we will know the answer to the question of how much land buying capital is in the marketplace.  
 

  

Randy Dickhut 

Senior Vice President - Real Estate Operations  

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