THE LORANDA GROUP, INC

As we have discussed here in previous entries, farm values van vary widely across the Midwest, across states & counties, and even across townships.  160 tillable acres in east-central Illinois is typically worth more per acre than 160 tillable acres in southern Illinois.  Obviously, the biggest difference between these 2 regions is soil types, which determines how productive the farm will be and how many dollars can be pulled from it.  However, other factors such as weather patterns, local buyer strength, etc. also play roles in determining the value of a property.

While farmland buyers have always placed a premium on Class A farms, the past few years we have seen this premium become even greater.  When looking at farmland value trends across a region, it is important to remember that there are many micro-markets inside these regions.  While the land prices in a region may appear to be holding steady, a closer look may reveal that the poorer farms have decreased in value while the larger, more productive farms have increased in value.

A recent article in the Sioux City Journal describes just this scenario, except in Iowa instead of Illinois.  The article (here) discusses some recent land sales in Iowa as well as trends in various counties.  According to the author, some counties in Iowa experienced gains in values as high as 4+% in the last year, while other counties saw declines in value of more than 6%.

So when you are trying to get a handle on what this market is doing, and what your farm may be worth, it is important to look at the sales in your immediate area.  That will give you a reasonably good idea of what to expect out of your property.

Do you have any thoughts on the premiums being placed on the top farms?  Curious as to what farmland values are doing in your specific area?  Feel free to email me at eric@loranda.com.

Source: Sioux City Journal