Farm Land prices today and what I see for the future.
Over the last 30 days we again had to adjust. There will always be new obstacles that need to be overcome. Here’s what I have noticed about land owners, buyers, sellers, bankers, accountants, farmers, and rural land investors involved in agriculture over the last 2 weeks.
To be involved in agricultural land or become involved in one way or another people seem to have one common. That common is the general belief that we will always have to grow, extract or place things on or in land. Whether it be using the water or wind to generate power, growing crops for human or animal consumption, or extracting sand or minerals for concrete; it all comes back to the LAND.
The thing I have noticed about the people is we have become very realistic and resilient to fear and media negativity. Sure, we may have to change the way we do things for a little bit but we all deal with disease, weather, market changes, and problems every day and this is just another adjustment we are having to deal with and have remained very calm and stable as a group.
Land prices have remained very stable with an increase in buyer interest in the stable land investment category. In the last 5 days I have watched every sale I can putting a price on what it should sell in advance of the sale, only to watch it hit that number or even go higher. The last 5 auctions or listings have ranged from $8,600/ac, $4,717/ac, $7,625/ac $8,125/ac $6,240/ac. Tillable or recreational, good or bad, you name it; it has all stayed on course.
What I see for the future is an increase in people being interested in land as an investment and here’s why. The simple saying of you cannot make more of it keeps replaying in my mind. You can make more offices, apartments, stocks, bonds, companies, or houses and they have been overbuilt and are about to struggle if they already are not. Those assets have all been created at extreme rates with favorable times for the last decade. Land in our service area has experienced the opposite since about 2012 coming off a boom from 2008-2012. We have had high operating interest rates, low commodity prices, low milk prices, trade war issues, and major weather challenges, just to name a few. We have had a slip in land prices and rental rates over the last 5-10 years and are now sitting at good 3-5% ROI’s on land with cheaper interest rates than ever. Here’s my positive outlook “what if”. What if we have another drought following this wet cycle, what if we have an advancement in land like we do in every 10-20 year cycle from the past, what if we have something positive happen in agriculture with all the technology and efficiencies we have implemented that has to be used by the masses due to it being one of the most “essential” industries available. We rented farms this year for less than half of what they rented for 8 years ago. What if you could buy a farm today, lock in low rates and rent it for double or sell the crop produced off it for double in the future?
High Point has had a huge increase in buyers looking for land, registering for online auctions, and watching our educational videos abut land investing in the last 14 days. We think there are bright days ahead for agriculture and land in the future. Call one of our agents to talk land today.