In the land market the question is whether the strength in prices will carry forward. At this point, if the fundamental factors supporting land prices continue in the current direction, the market should be firm to somewhat higher. Commodity prices and farm incomes will need to remain above long-term averages to provide the financial ability for producers to consider buying more land. If the supply of land for sale doesn't outpace the demand from producers and investors, the land market will remain in equilibrium at the higher prices. Finally, interest rates are a question mark as the Federal Reserve has indicated that FED rates will be gradually increasing. What level rates move to and how this impacts borrowing costs will be determined over the coming year.
If any of these underlying factors change or unexpected world or national events come about, the land market could pause and even change direction depending on the size of any changing factor. For now, the outlook for the land market is positive as farmland continues to be a safe, long-term investment that producers and investors are seeking. More will be known about the direction of the land market as the winter sales season transpires over the coming three months.
Senior Vice President - Real Estate Operations
|Category: Agricultural Real Estate News|