By Jean-Paul MacDonald
Farms.com
Farmland Values Hold Steady as Real Estate Market Stabilizes. The July 2023 Benchmark Farmland Report from Farm Credit Services of America (FCSAmerica) shows that the real estate market is showing indications of stabilization.
The financial cooperative, known for appraising benchmark farms in Iowa, Nebraska, South Dakota, and Wyoming, reports that while cropland values continued to rise in the first half of 2023, the overall market is showing increased stability.
The report highlights that limited availability of land contributed to strong benchmark values in certain markets, while areas with a consistent land supply experienced steadier value. Higher-quality cropland also supported higher values, while average to below-average ground saw smaller increases. This suggests a more balanced and stable market for agricultural real estate.
Pasture and ranchland values were driven by high demand and limited supply, with South Dakota experiencing a significant increase of 12.2% since July 2022, while Wyoming saw values rise by 15.5% year-over-year. In contrast, Nebraska pasture values showed a slight decline.
Despite successive interest rate hikes and regional drought, all agricultural land types continue to maintain record-high values. The market has demonstrated resilience in the face of challenges, thanks to the strong profitability and financial health of the agriculture sector.
Looking ahead, tighter profit margins resulting from higher input costs and lower commodity prices may lead to a flattening of land values, with some areas possibly experiencing a slight decline. However, the overall financial strength of producers, coupled with ample liquidity on farm balance sheets, is expected to sustain activity in the real estate market.