Land prices for the month of December 2021 were stable month over month remaining very strong. We had many types of sales this month for many types of properties sold as a traditional listing, off market, seal bid auction, live auction and online auction and all methods very effective at achieving top market prices.
The general consensus from buyers is still that interest is low, everything to do with income and cashflow is high and there is not secure investment alternatives to land currently. That paired with conversations with buyers about inflation and future tax and basis changes has land prices stable even though a substantial amount became available over 4th quarter and throughout the 2021 year.
Farmland has not been the only category to see a substantial increase even though that is where many of the headlines have focused. Yes, we have seen an increase in that space from 20-30%, however the hunting land and rural recreational property have increased nearly 50% on average overall. A couple recent examples in Trempealeau County, WI; Chickasaw and Clayton County, IA; and Winona County, MN confirm that high quality recreational land is in the 5-7000/ac range on a regular basis. The explanation is primarily scarcity and affordability even though an argument could be made for increased timber values, CRP, and tillable land rent factoring in on the price. The want for a place to put in food plots for hunting, have a cabin, rural home, pond, or place to shut out the world and call your own has never been higher. When that is paired with interest rates in the 3.25-4.25% range with long term amortization schedules, rate lock terms and a lot of cash or equity increases in the country we have affordability being a major factor more than cashflow of a property much like other recreational land in the nation.
Farmland on the other hand has not let off the gas and I am not sure if it will, or should I say when it does. I think we will see another plateau mirroring 2013-2018 if I had to look at a crystal ball. Interest rates are getting locked in for 10-30 years, the stock market has been in park for some time, and corn is currently north of $6.00/bu after one of the largest yielding harvests the Midwest has ever seen. This tells me operators and investors alike will have cash pre and post end of year and there will be purchasing power into 2022. Inputs are one item we are watching closely as rents and fuel prices climb as well as fertilizer, chemical, equipment and seed shortages all become concerns.
We have many listings on our website currently available as well as auctions coming on the market for the first quarter of 2022. If you have questions about land as an investment, a farm offering tax or depreciation benefits or what the land market is doing in your area talk to one of our professional land agents or auctioneers. They are a wealth of knowledge and care about our clients best interest above all else.
We want to thank all of our wonderful buyers, sellers, farm management, and appraisal clients for another great year in land business. All of us at High Point appreciate your business and trust and wish you a Happy New Year!