Ratio of Farm Real Estate to Net Cash Farm income
Figure 3 presents the ratio of the value of farm real estate to net cash farm income. This ratio is calculated because of the notably different time paths in net cash farm income during the 1970 and current period of farm prosperity. Unsurprisingly, this ratio also exhibits different time paths. During the 1970 prosperity, the ratio consistently trended upward. In 1973, farm real estate was 8.4 times net cash farm income. By 1981, farm real estate was 24.9 times net cash farm income. In contrast, no trend is apparent in this ratio during the current period of farm prosperity. The ratio has fluctuated around its average value of 21.6.