Post
Have land prices hit the ceiling?
Over the last several years – farmers have seen land prices increase significantly. Ken Springer, assistant vice-president at Farmers National Company says since 2006 there has been double a digit appreciation for land values – until this last year. “Throughout the corn and soybean areas it appears we’ve bumped the ceiling on land values,” he says. “We haven’t seen a drop-off like we did in the 80’s. But in some places we’re seeing about a 10 to 15 percent reduction in land values.”
But with the decrease in commodity prices, Springer tells Brownfield that land prices are still relatively high. “From the farmers side – a lot of them had to lower their expectation on rate of return,” he says. “They’ve had to lower their expectation of returns to 1 percent or 2 percent at the best. While the investors have expectations closer to a 3.5 percent rate of return.”
But, he says, there doesn’t seem to be a shortage of investors looking to purchase farmland when it becomes available.
Add Comment