How high, and when will it peak out?

Prices now dictate that it's not really farmland anymore.

You'd need more than one lifetime to ever see any blue sky from agriculture use.

I may just be a dumb Aggie, but I can’t figure it out. And we’re getting yields well above average, and not paying for fertilizer. Still can’t pay a note and make living, let alone replace equipment.

I recall back in the 1970s, my dad passed up buying several pieces of farmland. His math said that an average crop would not make the payments, let alone machinery, seed cost etc. Those that bought it, lost it to bankruptcy several years later. Dads math was correct.
Seems today that lots of farm land being purchased is done so by non farmers. And those buyers are paying cash for the land. Income from crops while nice is not necessary to retain ownership. Presume that these buyers are betting on long term investment and/or diversifying into some hard assets vs all stocks and bonds.
When will prices peak, I do not know, but would guess we are very close to peak.

While our commodity prices are up nicely, much better than the past few years, I don't think this is the entire reason for higher land prices. With a bout of massive inflation on the horizon I'm thinking folks with the cash are looking for places to put it that will keep some kind of value.

Land. "They're not making any more of it." Quoted from many an old fart in the neighborhood.

It is a very complex question with so many variables to consider. Back in the 1980s I saw neighbors and some relatives buying farm land and equipment at 15 to 18% interest. The bankers were pushing them to get big. When corn prices dropped to 3.50/bushel and milk went to $13.00 per hundred weight the law of diminishing returns buried a lot of farmers. Fortunately my Dad did not participate in the get big scenario. When I got out of college my Dad and I formed a corporation and were able to secure low interest rate loans.

We targeted the small farm operations going out of business that because of the topography, the land was about 60/40. 60% timber/pasture, 40% tillable on average. To pay off the debt we logged the timber, sold some of the non-tillable to city folks wanting to recreate and hunt and enrolled a lot of the poorer ground in the CRP program. CRP is a good way to pay off a farm.

When the dairy herd was sold we had to look for different revenue. We continued logging and went with beef cows and crops also, land speculation. When Dad passed away I brought on a hired man to help with logging and farm chores. My farm equipment was ageing and some needed to be replaced, but I put a pencil to the situation and found I could hire custom work cheaper than purchasing good used equipment or new. So the land prices in my area with a combination of recreation and tillable track higher than just tillable land. I don't see that peaking yet.

Solid way of looking at it.

Now, when buying agriculture land, if you can afford it, it'll be worth more in the future.

The investment now is more in the land, rather than what the land can produce in agriculture.

Fifty years plus, I've been told it takes an eighty, along with a bought eighty to pay for it.

50 k an acre for almond orchard ground in California’s San Joaquin Valley…..craziness.

It does not look like we will see $2500 land again.

Not unless you go to the Nevada desert 👍…. My grandfather had a 100 acre piece with a cheap rental and 30 year old almond trees that needed to be replanted …. my mom and her siblings sold it last year for 40,000 an acre…..guy who bought it already farms about 2000 acres…. It’s a different game, huge input costs….. almonds average about 3000lbs an acre and last year sold about 1.90 a pound….. 2014 was almost 4.00 a pound lol. None of it makes any sense.

Jeepers Richard, we need to be planting almond trees!

I started paying attention to land prices about 1962.

The high then was $400. I watched land climb to $3200, and never though it would go down, then along came 1985.

I'm totally in the dark.

Around here there are old guys with deep pockets that bought land from300-1200 acre if they want it they just buy it
Spread the cost over all the other acres

Ground in parts of western South Dakota has gone up a lot, especially in or near the Black Hills. The farm across from my place just sold to a guy from Colorado for three times what the owner paid a few years ago. Some California people moving here and some Mennonites coming into the area too. The times, they are a changing.

We have Cali people floodng into Missouri ,,,,,,,,,,,,Its cheap to them here ,,and they are driving up prices to boot

I talked to a young man last week that said a piece of farm ground close to Orange City, IA recently sold for $18,700.00/A

That sounds like all the Mennonites and Amish that have moved here from Pennsylvania. They said they could sell an acre there and buy five here. Since they started coming here 25 or so years ago, land prices have skyrocketed.

Recently a 100 ac tract of farmland sold here for $16,000 an acre Morgan county,Illinois just west of Springfield.

77acres in Sioux County brought $21,200/acre today

And I thought the $15K/ac around here for decent ground was bad. Wow.

Just sell it to Hughes, Scott. He will make another housing addition and you can retire! LOL

Watching the neighbors rip on a farm we passed on at about seven thousand --, hindsight,

Could have bought a ranch, not that many years ago, over by Wimberley, TX. Good sized place... like 15,000 acres. Price- $150 per acre.

Now it's $15-30k per acre.

Pretty poor ranch country, but people fleeing Austin drove it insanely expensive.

in the last 20 years here tator farms have been selling for 50.000 an acre or more to build new house,s on 80 by 80 foot lots

Something I've pondered for years.
If farmers aren't makin' no money, how they
kept buying land at thousands per acre.

Our local ones sure aren't.
Farms are sold to [bleep] imports, and broke up.
Most, you see broke into 50 acre chunks.
Because 200 acres is more than most could bear.

Always said if I won the powerball (rarely even play)
I'd buy every close by farm tgat came for sale.
Just to keep Baltimorons out, and the properties intact.

If it's like around here, and im sure it is,
one of these investment companies buy
it and split it up into 5 to 20 acre " mini ranches "
or the "getaway " land, and advertise it at
so much down so much a month and put a
option in that it can't be sold out of the possession
of so-and-so properties LLC and they get to
take it back when the people lose interest, or
figure out what work having property is even
when they go get in debt for that cab kubota to
mow their 5 acres with
I enjoy seeing these in this region when that
august heat starts toasting the imports, or
they try to drive on the ice instead of the fluffy
snow they're used to

Not to beat a dead horse,2 tracts productive farmland totaling 340 ac Eastern Morgan county Illinois,brought $17,700 an acre. How can you pencil that out? This is approx 3 miles from where I live, the bubble will burst sooner or later.

Must be long term investment strategy. Someone paid cash for it and the crops provide some decent cash flow. A generation or two down the road it will be sold at a decent gain.

I paid about $2000 an acre for a 5 acre lot back in 1976 and that was considered too high. A lot about 1/2 mile from me sold for $300,000 this past fall, and it didn't have tree on it. Back in1970 or so, I should have bought that 160 acres east of Albuquerque for $28 /acre.

God isn't making anymore land and it will only continue to rise

Around here where it took 30 acres or so to run a cow/calf pair, they are raising houses 8 to an acre and selling them for $300,000 base.

There isn't a farm or ranch, if you can call one that, within 20 miles of me now over 40 acres.

We had a couple farms sell at auction a couple months back. I heard the better sold for nearly 15k/acre, the other was just a bit less.

I still think a lot of this is people wanting to put their money in something solid. Not on paper in the stock market.

One of the only two bidders is a personal friend. His equipment dealership was most likely subsidizing the possible purchase. Most likely thinking the purchase would help future generations down the road. Even with high commodity prices and low interest rates this would have to be a extremely long term thinking.

farm just sold her in nebraske a few weeks ago 16800 /acre 160 acres another really poor farm sold over 9k it was 120 and a really poor farm i looked it over and decided i didnt even want it it was really steap broke up with timber and poor soil type

Another 80 ac sold yesterday for 18,000 an acre

Unless we have another Great Depression or some other life changing event, I cannot see land prices ever going back down. There may be a leveling off, and probably will be to some extent, but as the old saying goes...........they ain't making it anymore.

Land prices never seem to do well when interest rates rise significantly.......

Land prices aren't like that everywhere. You would be hard pressed to be 2-3k/ac in Se Ks

I just bought a 2160 sf house and 19.7 acres in Northern Alabama for $260,000 cash . Not really farm land as such but enough for some cows and a few pigs with plenty of deer and squirrels . Got at least 100 Red and White oak saw logs in the front yard alone .

Bought 27 acres in Minor Hill Tennessee in 2007 for $65,000 .Got 11 acres in pasture and the rest in woods with a fair pole barn . Cut logs off of it two years ago and will have another cutting in about ten years . Good deer and Turkey hunting and the taxes are cheap as long as I keep it on the Greenbelt.

The printing of money that has been going on since Ben Bernanke was at the fed called “quantitative easing” has driven up asset prices such as farmland. The big “family” banks at the click of a mouse get billions to loan or invest themselves. Those who have the capability try to turn the paper money into something they can actually put their hands on.

I bought some land in Goodhue county MN last month for 4k/acre, wooded recreation land. Neighbors thought I was crazy, but in the same township last week there were two, 2 acre building sites that sold for 60k each.

Land prices like everything else cycle up and down depending upon commodity prices, input costs, interest rates, and external pressures like housing sites.

Long ago, my parents bought a lot of prime farmland for $5 per acre. Lightning killed a bunch of their livestock they were planning to sell so they had to sell the land as they couldn't make the payments. A few years later, they bought it back for $10 per acre. Would likely now sell for somewhere in the $15,000 per acre range. But... I know a bunch of farmers who went broke buying expensive land during the Carter years when interest rates went crazy and he imposed grain embargoes.

$5/acre?

Where?

Land lust at an all time high in NW Iowa, 96 acres farmland in Plymouth county went for $25,000/acre.
Where will it end?

I think I'm kind of prices a real farm is just going to pay interest rate instead of rent and still be in debt to the land when they purchaser is dead

Hmmm, might be time to sell 100acs I have in Maine....

I've heard some people speculating that the lending institutions in my area are going to start to tighten up on loaning money on this high dollar land............but, I've not seen any evidence of that, yet. As I've written about before, the Mennonites and Amish are responsible for the high prices here, especially the Mennonites. They buy anything and everything that comes up for sale, and don't seem to mind paying whatever it takes to buy it. With their population growing, they must have a place to live or else move elsewhere, so price is whatever they are willing to pay.

Sounds like they are setting the market there.

Two things...

1) Are they paying cash, or financing?

2) With inflated land sales like that, higher tax values will follow the comps. They aren't doing their neighbors any favors at the tax office.

Barry, some of them sold land back in Pennsylvania for some very good prices, and that has allowed them to come here and buy more land than they had back where they came from. They were the lucky ones, as they didn't have to go in debt to buy land. But, not all of them fit into that category. A lot of them have to finance what they've bought, and from what I've been told, quite a few are just paying the interest and nothing on the principal. But, they are usually considered good risks by the people who loan them money, as it's rare to see any of them being repossessed.

As far as tax values go, we are very lucky here in Kentucky because farmland is both evaluated and taxed at a much lower rate than is other property. But, they have driven property values up dramatically, and it's probably just a matter of time before our taxes will be adjusted for that. The one thing that's in our favor is that a lot of the elected officials that make the laws here come from rural areas and they don't like paying taxes anymore than I do.

There is no way to pay cash for land or finance it that it will pay back the money invested in it or make the principal and interest payments if it was financed, let alone make living from it.

If one has money to pay cash for the land, he/she can make lot more money investing in other things.

Good farmland is a solid investment.

I disagree.

Land values have increased beyond all expectations. Certainly better than lots of other investments.

They ain't making anymore dirt. Rio7

I have not found this to be the case in my buy and sell land transactions.

I agree, but real estate with both cropland and timber is an even better investment.

Iowa ground went up 23% last year. Good luck on paying it off in the future

Just had a 117 acre parcel a few miles from my place sell for $2.6 mil.

Sure is a far cry from $1-2k an acre locally 15-20 years ago.

I buy and sell a fair amount of land here in SC. The prices have doubled to quadrupled in the last 18 months. We have seen this show before...

You better have your hand on a chair when the music stops...

And some cash to buy at the fire sale.

How many dollars will an acre of soybeans or corn on land like that net after input costs, assuming current crop prices?

I agree with this, in most cases. I bought 640 acres in 2010. It’s appreciated quite a bit but I’d have been better off in other investments. I have been fortunate in that two oil pipelines were run across my land and they paid good money. And I’ve made CRP income. I do not regret the purchase and am trying to buy an adjoining 320 acres.
I view this land as a long term “hard asset” investment as opposed to “paper” investments.

Land around here has doubled in the last 3 years. Not many other investments do that or are as safe.

We gave $7500 an acre for ground in March, 99% timber. If I wanted to sell today I bet I could get $2k an acre more and I might have to sit on it for a month.

I tried on a 20 acre piece that had a contract within 2 days. Actually had a 100' wide "easement" that was sold with the property, 1/2 mile back to it.

If you don't want to sell around here you better not put a price on it.

Maybe so, but it is usually long term This high inflation won't last long and people will find their land values are under water compared to what they paid/financed for.Then you will see a lot of foreclosures.That high price will be over shadowed short term because of price of fuel, fertilizer, seed. equipment maintenance etc..Then you have the increase of cost of electric or gas for irrigation if you use it. Here in the west 50 acres is a hobby farm.You might pick up a half or full section but you want make living on it . A lot of land takes 30-40 acres to run a cow calf pair. Most land sales are in the 500-1000 acres realm or more.Those triple value land prices are when they are putting 6 or more houses per acre, not farms. Old folks are dying off and the kids want the money.Th developers will grab it up and make a lot more.

Has anyone seen a drop in prices as of yet? Seems like they are stronger than ever here , even with interest rates going up !!

Same here, sale prices still going up even in the middle of the worst drought in over 40 years.

Still selling at pretty high prices around here, but I have seen a few plots with prices a little lower than they had been running. Most were going for $15-20k per acre fairly recently, but there's a few listed now in the 8-10 range. Most are still closer to 15, though.

With mortgage rates over 7% now, I expect there to be a considerable downturn in the market. Cash buyers will be some of the few buying farm/ranch land for the next several years. Property has gotten ridiculously expensive.