OMAHA,
Neb., July 8, 2024 /PRNewswire/
-- According to Farmers National Company, the agricultural
land market has been "nothing short of exceptional during the past
five years." Gains in value are prevalent across all classes of
land in every region of the country. Strong commodity markets,
moderate interest rates, buyer demand, and an overall healthy
agricultural economy have also supported the growth of land values
during this time.
"But a lot has changed in the past 12 months, and even more has
changed within the past five years," said Paul Schadegg, senior vice president of real
estate operations at Farmers National Company. "Moving into the
second half of 2023 and the first half of 2024, we've experienced
significant increases in interest rates, declining grain markets,
and inflation. Despite these negative pressures, the land market
has remained relatively resilient but shows signs of settling in
general, including single-digit decreases in specific areas."
One aspect of the agricultural land market is the long-term
appreciation of land value. Over the past 25 years, land values
have experienced a stair-stepping trend following the ups and downs
of the agricultural economy. As grain markets and farm
profitability rose, the land markets followed while leveling off as
markets and profitability did the same. Schadegg said each plateau
has set a new value standard sustained through production, demand,
and profitability.
"A significant factor in maintaining the level of land values
has been investor interest in the market. While these bidders are
not always successful buyers of land, they are certainly involved
in setting the floor on values as they bid up to the levels of
their investment criteria. This segment of buyers also considers
the long-term appreciation in value we have experienced in the past
25 years, the potential for future appreciation, and land's value
as a diversified asset," Schadegg said.
As buyers consider land purchases during the second half of
2024, the additional expenses for interest and lower commodity
markets will be at the forefront of their decisions. Schadegg said
that the market value of land will adjust according to the level of
demand and profitability potential.
"We anticipate regional differences to changes in land value
across the U.S. Areas with strong supply/demand scenarios,
expansion of alternative land use projects, and irrigation water
concerns may experience more dramatic increases or decreases in
value," Schadegg said. "There remains a strong appetite for land as
an investment from outside investors and ag producers. The investor
is looking for an asset that will produce an annual return, while
the ag producer may look for expansion opportunities. Emotion comes
into play when the ag producer is motivated by adjoining land,
operation expansion, or land that has potentially never been
offered for sale in the area."
With farm operators being the largest segment of land buyers,
the biggest impact on land values moving forward will be
profitability in agriculture. If profit opportunities are limited,
motivation to buy will decrease and, subsequently, pressure land
values into a downward trend.
"Farmers National Company and our agents continue to see strong
demand for real estate services across our marketing regions.
Listing volume and closed transactions at the company match the
pace we saw in 2023, with activity and interest building into the
fall selling season. The listing volume and transaction results
remain well ahead of the company's 5-year average," Schadegg
said.
Many upcoming sales have transitioned back to standard listings
as sellers reserve the option to negotiate values in a changing
land market.
"This is an exciting time for agriculture land owners across the
US. Your land asset has never been more valuable than it is today.
The strong demand for ag land and its historical appreciation in
value will continue to support the current values as we progress
into the second half of 2024," Schadegg said.
Click here to access our online newsroom, where
you'll find a company fact sheet, this release, and the regional
report.
Employee-owned Farmers National Company is the nation's leading
landowner services provider. Farmers National Company manages more
than 5,000 farms and ranches in 30 states comprising more than 2
million acres. Over the last five years, Farmers National Company
has sold 4,650 properties (1,640 at auction) and more than
$3.25 billion of real estate.
Additional services provided by the company include energy
management, appraisals, insurance, hunting lease management, forest
management, FNC Ag Stock, consultations, and collateral
inspections. For more information about our company and the
services provided, visit www.FarmersNational.com.
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SOURCE Farmers National Company