Land sales buck recent market speculation
All the news about the farmland market has lately been focused on one trend: The leveling off of the years-long rocketing of the market and its implications for related markets to farmers.
However, recent auction sales data for farms across the Corn Belt and dipping into the mid-South show that while the last few years' climb in land values may not be sustainable forever, there's not a whole lot keeping a lid on sale prices right now despite the economic factors foreshadowing a plateau in values, according to one auction company.
"Whether we've been in Wisconsin, Arkansas, Indiana, Michigan, or Ohio, we've consistently seen big crowds and intense competition for the properties we've offered during November," says Rex Schrader of Schrader Real Estate and Auction Company based in Columbia City, Indiana. "We've seen it on farms of all sizes, in a broad geographic area. This has resulted in very strong sale prices, with participation from farmers and investors alike."
Schrader points to recent sales in Wisconsin and Arkansas as specific examples that show land's value has yet to hit its top; in two recent sales in the former state, a farmer paid just over $9,200 an acre for 256 acres, while in Arkansas, farms have netted just under $3,700 an acre in recent sales. Both prices show "the direction has continued upward," for land values, he says.
Schrader is quick to point out he doesn't see the current upward trend continuing forever. But he's also quick to point out there's only one true arbiter of the farmland market.
"In a market like this one, there's a strong temptation to try to prognosticate, but all we can ever really know is what we're actually seeing in the marketplace," Schrader says. "We all know that annual gains of 20% or 25% can't be sustained forever. But what prices will do in the future is something only the marketplace can tell us," said Schrader."