Sell-off Keeps Land Values Strong

Investors still see land as good bet long-term; farmers seek to increase holdings; bidding wars fierce.

Published on: Jun 20, 2013

The supply of premium quality farmland is tightening and the number of properties being offered for sale is declining, according to Farmers National Company, the nation's largest farmland and ranchland real estate company.

At the end of 2012, there was an accelerated farmland sell-off, prompted by economic uncertainty and tax law changes, said Derrick Volchoff, vice president of real estate operations. High quality land is in high demand and top buyers are competing for the acres that come up for sale, Volchoff said.

That competition is fueling strong land values, averaging 20 percent above comparable land in 2012, he said. Lower quality land values are staying steady, he said.

"Many transactions for high quality land are being sold via auction, which drives prices through competitive situations," said Derrick Volchoff, vice president of real estate operations at Farmers National Company.
"Many transactions for high quality land are being sold via auction, which drives prices through competitive situations," said Derrick Volchoff, vice president of real estate operations at Farmers National Company.

"Many transactions for high quality land are being sold via auction, which drives prices through competitive situations."

Bidding wars have become the norm for high quality land sales, he said, and areas that a few years ago rarely saw auctions, such as the Delta region, are now seeing them on a regular basis, he said.

Parcels being sold in a single sale are also getting bigger, Volchoff said.

Transactions to increase this year

Moving into the third quarter of 2013, Farmers National Company expects the number of transactions being closed to increase, based on activity seen in the past 60 days, he said. Investors continue to see land as a safe long-term investment while farmers are putting cash reserves back nto land when it becomes available.

"Even with recent drops in crop size for farmers, profits are still at a level higher than in 2010," said Volchoff. "Farm debt is still low in relative historical terms."

Monty Muesch, Farmers National Company area sales manager in the High Plains, said land values in Kansas Oklahoma and Texas are not showing a down turn in spite of strong weather challenges. High on the list of reasons for that, he says, is the impact of an inventory shortage that resulted from a strong sell-off late in 2012.

In the coming months, Meusch expects the number of listings to slow down in High Plains region.

Sales prices in Kansas of top quality land range from $3,800 to $6,000 per acre depending on location.  Prices for irrigated high quality cropland in the Texas Panhandle are between $3,000 and $4,000 per acre.

Source: Farmers National Company