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June 24, 2019
Location and quality are key drivers of land prices throughout the eastern cornbelt, despite the overall slower land market. "Good quality farmland normally sells well as will recreation properties in the right locations. But lower quality farmland saw a decline this past year," commented Roger Hayworth, ALC, Area Sales Manager Farmers National Company.
"The agricultural real estate market in my area of the Midwest has taken a sluggish turn when compared to a year ago" observed Hayworth. "The uncertainty created by trade issues and projections of continuing lower farm incomes clouds the horizon for farmers and land buyers." Over the whole agricultural land market, Farmers National Company saw a 29% increase in acres sold during the first part of the year due to selling larger tracts and some additional distressed sales.
Buying interest for land has remained adequate for the amount on the market for sale, but the buyer profile has changed somewhat according to Hayworth. The farmer buyer is being more cautious and more selective in the farms they will bid on. The 1031 exchange buyers have been active and continue to support current land prices. Investors are also active buyers depending on the type of land they are interested in and the desired returns.
Ag lenders are starting to report that some of their borrowers are experiencing financial stress from multiple years of low commodity prices and farm incomes. Working capital is declining with the tighter margins putting pressure on loan repayment capacity. Delayed planting and acres not planted at all have added uncertainty to the eastern cornbelt this year.
Senior Vice President - Real Estate Operations
|Category: Agricultural Real Estate News|