Land Prices for the month of August 2021 remained very strong at levels similar to the previous month. This time of year we are focused on scheduling upcoming land auctions, compiling inventory of deer and wildlife photos on listings, and looking at tillable land rents or new tenant contracts for next years growing season. In the state of Iowa for example the deadline to terminate a farm lease for the next growing season is September 1st. In the event the farm lease is not terminated it continues automatically on a year to year basis based on the current terms of the agreement unless proper notification is served before September 1.
The land market has remained strong for 4 main reasons. First interest rates on land are consistently in the 3-4% range with lenders today in the area from our experience. This allows the buyer to have a lower payment and pay more for the property. Pair this with longer amortization schedules, rate lock terms and aggressive lenders competing with one another and you have favorable buying conditions. The next reason is commodity prices from timber to corn, soybeans, hogs, wheat, cattle, hay, etc have all fluctuated and for the most part much higher than they were a year ago. When this happened people who operate in this space as a farmer or landowner see an increase in revenue and buy more land. Third was covid, not only did this pandemic drive people to the country, smaller communities, and rural in country travel it also made people realize that life is short and want to own something of their own for reasons of food, water, and protection as well as enjoyment out of the city. This increased demand and reduced supply in an already tight market. The last reason land prices have increased and in my opinion will continue to, is the stock market being too high for new investments and buyers wanting a secure place for their money. Once you have made money the goal is to keep it, and there is no better way to do that then purchase a tract of land that produces income from food production.
One thing we do not bring up nearly enough is our land appraisal department that tracks every sale to use as comparables for appraisals for banks, estates, land owners, trusts, and many other purposes. If you are wondering what a property is worth in today’s market, making a purchase or settling an estate and are in need of a land appraisal in Minnesota or farm land appraisal in Iowa our team appraisers are very quick and cost effective.
Enjoy the remainder of your summer and thank you to all of our wonderful clients.