Search All Listings
Search by Real Estate Listing #
Search Site
Search All Listings
Search by Real Estate Listing #
Search Site
Talk to Us
Call Us Facebook Twitter LinkedIn YouTube Instagram
Email A Friend
Talk to Us
Call Us Facebook Twitter LinkedIn YouTube Instagram
Email A Friend
Trends to Watch That May Affect Land Values
You are here:   Blog  »  Agricultural Real Estate  »  Trends to Watch That May Affect Land Values

April 1, 2019 

There are a multitude of good informational sources pertaining to agriculture with the U.S.D.A leading the way along with both the National Agriculture Statistics Service (NASS) and the Economic Research Service (ERS) which are within the U.S.D.A. In addition, land grant universities generate great information as do private firms and individuals involved in ag. Put it all together and those involved in agriculture have a full complement of informational resources to assist them in their analysis and work. Many are paying close attention to the economic and debt trends in agriculture right now in order to garner some idea where the land market might be headed.

Several trends reflect a negative effect on land values. One is the trend in Net Farm Income. With 2018 forecasted net farm income to be near $64 billion and 2019 expected to be near $69 billion, the trend for farm income remains well below the longer term real net farm income of $84 billion. The trend in Working Capital (current assets - current debt) is going the wrong way for U.S. agriculture. With a recent peak of just over $160 billion in 2012, working capital is projected to decline to near $50 billion in 2019. Overall ag sector debt has increased in real terms to almost the high reached in 1980-81 with real estate debt increasing the most over this time. One last trend to watch is the Debt to Income Ratio that has been moving up the last few years, but remaining well below the 1980's peak. Finally, we have to remember that the majority of agricultural landowners have no debt due to their age, paying off previous debt over the years, or inheriting the land debt-free. Overall statistics and trends may not reflect what is happening with individual farmers and ranchers.  

Several positive trends are also having an impact on land values. One important one is Interest Rates. Rates are remaining historically low and recent Federal Reserve comments indicate that rates will be holding steady for the time being. Capitalization Rates for farmland and the yield on the Ten Year U.S. Treasury Bond have tracked fairly closely since the 1980's. Both indicators are currently on the low side of historical trends and may remain there for awhile longer. Another trend in the land market is the lower quantity of farms and ranches for sale. This has been lending support to land prices for a number of years. Landowners, producers, and lenders are watching this trend very closely.

Overall ag trends are important to watch as they are indicators of underlying economic factors affecting producers and the industry. These trends also impact land values and the land market. The aggregate trends in agriculture are only half the story as the situation of individual producers and landowners has great bearing on area land markets and prices. Agriculture is watching both macro trends and individual trends to look to the future.
  

   

Randy Dickhut 

Senior Vice President - Real Estate Operations 

 

 Register online to receive email updates.  

All News  Category: Agricultural Real Estate News
Blog Home  Blog Home
Back to Top
Print Show Printable Page
Search Listings and Website
Search All Listings
Search by Real Estate Listing #
Search Site