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8
Increasing Demand Increases Value of Farmland
The value of farmland is on the rise because of an increasing demand. Although prices vary based on location and size of parcel, high-quality crop land in the Quad-Cities region and western Illinois is selling for about $8,000 to $9,000 an acre, according toDennis Stolk, of Ruhl & Ruhl's Davenport Farm & Land division. Mr. Stolk said prices can be found on either side of that spectrum, but spring and summer sales have been in excess of $8,000 and acre, with "several now $9,000 and over." That's up from about $5,000 to $6,000 an acre a couple years ago, he said. Iowa farmland increased from about $5,100 an acre to about $5,500 from 2006 to 2010, Shane Johnson, Quad City Area Realtor Association CEO, said. A U.S. Department of Agriculture Land Values Summary released Aug. 4, says the median price of Illinois farmland was $5,700 an acre in 2011, up $1,680 from 2007. The median price for Iowa farmland was $5,600 an acre in 2011, up $2,230 from 2007. There's a "much greater demand than there is supply" of available farmland, said Tom Marcus, a Ruhl & Ruhl Realtor in the Maquoketa area who has been selling farmland for more than 35 years. "We have very few sellers and people waiting in line to buy." "Wehave definitely seen a rise in price per acre of farm ground, particularly in our region," said Craig Wainwright, owner of Wainwright Realty in Port Byron. Farmers also are "blessed" right now with high commodity prices, so are "willing to pay more for the ground," hesaid. "The 2011 increase continues a string of large increases that began in 2004," University of Illinois agriculture economist and farm management specialist Gary Schnitkey said in a press release. The last seven-year period in which Illinois land prices increased an equivalent amount was from 1975 to 1981 when farmland jumped from$846 an acre to $2,188 an acre, he said. Mr. Stolk said the strong market has been fueled by "good, strong farm profits, high commodity prices and low interest rates." "To have corn and bean prices pushing $7 and $14 (per bushel) respectively, that's pretty positive for land values," saidKevin Urick, president of the Henry County farm bureau and a RE/MAX real estate agent. Mr. Urick said a speaker at a commodity conference he attended this summer said that if corn prices rise, so will the cost and value of farmland."I think people are looking at land like gold right now." However, you don't have to remind "farmers too hard that values can drop," he said, adding that for now, "I would say they're pretty steady." As the price of land rises, so does the cost for farmers who rent fields. According to the University of Illinois release, the average cash rent in Illinois was $183 an acre this year. A USDA Agricultural Land Values and Cash Rents Final Estimates report said it was $132 an acre in 2006. According to reports on the Iowa State University Extension's website at www.extension.iastate.edu, the average cash rent in Iowa was $214 an acre this year, up from $137 an acre in 2006. It's currently cheaper for farmers to own land than to rent it, Mr. Marcus, the Maquoketa area Realtor said. For the most part, land buyers right now are other farmers. Mr. Urick said he heard at the commodities conference that roughly 70 percent of farmland buyers are farmers, and the rest are investors contemplating commercial developments. Mr. Johnson said it's good to see that the local real estate industry -- commercial and residential --"continues to be in very good shape when compared to other economies around the nation." The Quad-Cities area continues "to be a good place to invest in," he said. "We have good stability even in the midst of a very difficult economy."
Article Originally Published by Argus-Dispatch
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