Ag Land Market Slows After Historic Highs in 2021

Rising interest rates have slowed real estate sales across the country after record highs in 2021 and early 2022, that includes agricultural land sales. In tonight’s Your Money Matters, how the market for ag land has changed in the first half of 2023.

“Volume over the last two years is some of the highest we’ve seen on record. We sold a lot of farms in 2021 and 2022,” said Tom Schutter, the Farmers National Company Sales Manager for most of Iowa and SE Minnesota.

It’s been a busy couple of years for these sales managers from Farmers National Company who cover the Dakotas, Southwest Minnesota and Iowa.

“Crop prices started increasing in 2021 and farmers had the opportunity to market $5 corn again for the first time in over five years, once we saw that increase in commodity prices, we really saw land values follow that trend,” said Troy Swee, the Farmers National Company Sales manager covering Western MN and the Dakotas.

The higher crop prices combined with historically low-interest rates in 2021 had ag land values in the region skyrocketing.

“When we look at land prices pre-pandemic in southeast South Dakota, good quality farm ground is probably bringing in around $7,000 or $8,000 an acre,” Swee said. “Since then, we’ve seen nothing but an increase in farmland values… now were ranging into that $12,000 to $16,000 an acre range.”

“Iowa farmland is highly productive, especially in northwest Iowa, that’s some of the best ground in the state, we saw some of those prices get up in the $20,000 to $30,000 range during the peak year in the last two years,” Schutter said. “That’s up probably 40 percent in a very short two to three-year time period.”

The rapidly rising interest rates have helped slow down the number of farmland sales and have slightly brought down values.

“Prices have softened up maybe 10 to 15 percent since we saw the high of 2021, but that strong ag economy, strong demand from farmers, strong demand from investors and lack of supply in the market is really keeping those land values from eroding any further,” Swee said.

Both brokers expect to see prices remain stable through next year as the ag economy and commodity prices remain strong all across KELOLAND.

Source: keloland.com

Photo Credit: gettyimages-jimfeng