Farm Value Trends Show Markets Strengthened in 2009
May 05, 2010
Farm Credit Services of America monitors real estate value trends through semi-annual appraisals of sixty-seven agricultural farms located throughout the four states we serve. The Appraisal Team updates benchmark farm values based on recent real estate sales on January 1st and July 1st each year.
The following data is as of January 1, 2010:
The average change in benchmark farm values is shown below. The number of benchmark farms is shown in parenthesis after each state.
State Six Month One Year Five Year Ten Year
Iowa (21): 2.3% -1.0% 59.9% 139.1%
Nebraska (20): 5.8% 7.5% 71.8% 113.8%
South Dakota (23): 1.6% 3.3% 76.4% 231.1%
Wyoming (3): -2.0% -5.4% 33.2% 103.2%
The real estate market in late 2008 and early 2009 showed signs of slightly weaker prices from the peak values of mid-2008 due to decreasing commodity prices and uncertain financial markets. The real estate markets strengthened in late 2009 in response to:
- strong corn yields,
- strengthening commodity prices,
- profitable corn and soybean production,
- relatively low interest rates,
- lack of alternative investments (low CD rates and/or stock market uncertainty) from both the buyers’ and sellers’ perspectives,
- and a short supply of properties offered for sale as compared to recent years.
There continues to be good demand for good quality tracts with a softer market for marginal tracts.
The six month value trends indicate:
- Iowa’s benchmark farm values are stable with areas of strength. Value changes ranged from -3.2% to +18.1% with an average change of +2.3%.
- Nebraska’s market is mixed with benchmark value changes from -5.7% to +30.6% with an average of +5.8%.
- South Dakota’s market is considered mostly stable with a few outliers. The benchmark value changes ranged from -3.5% to +18.2% with an average of +1.6%.
- Wyoming’s ranch and dryland wheat benchmarks are stable with the irrigated benchmark dropping 5.9%%. The overall average change is -2.0%.