News

Land values decline 2% in 7th Federal District

The Federal Reserve Bank of Chicago says farmland values in the Seventh Federal Reserve District declined 2 percent in the third quarter but are the same as a year ago. This is the largest quarterly drop since the end of 2008 and only the third decrease since then.

A survey of 224 agricultural bankers in the District showing farmland in Illinois declined 2 percent, Wisconsin declined 4 percent and Iowa dropped 6 percent. Michigan farmland values increased 1 percent and Indiana was 4 percent higher than the second quarter.

Compared to a year ago, Iowa farmland is down 4 percent, Illinois 1 percent lower, Wisconsin is unchanged, Indiana is up 4 percent and Michigan farmland is 10 percent higher.

More than half of the survey respondents expect farmland values to decrease in the fourth quarter with only 1 percent expecting an increase.

A surge in demand for non-real estate loans compared to a year ago pushed the average loan-to-deposit ratio in the District to 69.5 percent. The highest level since the second quarter of 2011.  Repayment rates for non-real estate farm loans were lower than a year ago and loan renewals and extensions were higher.  Interest rates on real estate and operating loans remain near record low levels.

 

Read the full report here: