A land investment company predicts farm operators will continue to purchase land in 2018.
In a recent report, Peoples Company outlined land market trends in 2017. Brad Hayes, certified general appraiser, says his company saw a slight uptrend in prices for highly tillable tracts from 2016 to 2017.
“At the end of 2015, we were tracking a dollar per CSR 2 point. That dollar per point was $115. That kind of trended downward throughout the first quarter of 2016, at $101 and since then has bounced back up on a quarterly rate. The first quarter of 2017 was at $115 a point. (That) bumped up to $120 and then levelled off through the latter part of 2017,” Hayes said.
Peoples Company recorded 790 tracts marketed for auction. Of those tracts, 738 were sold and 52 did not meet reserve prices. Hayes reports the gross sales price of all tracts successfully sold at public auction reached over $560 million, or $7,190 per acre.
Hayes reports farm operators made the majority of land investments in 2017.
“Between 75 to 80% farmer operators are buying the land,” Hayes said. “Now, there is a lot of money on the sideline – folks that are trying to get in, investors who are kind of set on a floor. We have numerous clients looking to invest in land, but current pricing is not meeting their return expectations.”
Peoples Company saw a slight drop in land value prices heading into 2018, down 8 dollars from the 2017 average. However, Hayes expects to see similar trends in 2018.
“The biggest driver of these prices is a very low supply of farms available on the market,” Hayes said. “As of right now, there’s about 1.6 highly tillable farms per county across the state. There’s still a lot of buyers out there. It seems like every auction has multiple bidders, a lot of activity from buyers looking to expand their operations.”