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What is land worth?

Curt Arens Nebraska farm land
LAY OF THE LAND: Land values in all classes were quite different in 2005, compared to today. But the drivers of the market have some similarities.
Then and Now: Land values have continued on an upward course — with a few bumps along the road — over the past 17 years.

It would be a fair guess that besides the weather, farmland prices and cash rental rates might be one of the hottest topics at coffee shops across Nebraska. Of course, there isn’t much of a litmus test for accuracy, but those numbers are discussed and debated often enough. That’s why an article on Page 69 of the Husker Harvest Days special September issue of Nebraska Farmer in 2005 — 17 years ago — is so interesting. Using reports from North Platte and Omaha, Neb.; and Clinton, Ill., the article talks about average sale prices across the state that year, and how high land markets are going.

What makes this article even more timely is the fact that a recent report from the University of Nebraska about the 2022 Nebraska Farm Real Estate Market Survey indicated the largest increase this past spring in land values since 2014, and the highest statewide land value, not adjusted for inflation, in the history of the survey. That ought to get the coffee shop talk going.

Back then

“High-quality farm ground has been in the highest demand by both investors and farmers,” the 2005 article said. “Sale prices of $3,500 to $5,000 per acre are common in central and eastern Corn Belt, with prices of $2,500 to $3,500 per acre in the western Corn Belt.” The report from North Platte said that land values in the area at that time were running $300 to $420 per acre for grassland, with nonirrigated land going for $350 to $900 per acre. Irrigated crop ground was going for $1,200 to $1,700 per acre in 2005. “Industry estimates are that land values have increased from 20% to 25% in the past five years,” the article said. The report from an Omaha source said that top-quality farmland in western Iowa and eastern Nebraska at that time could garner $3,000 to $4,000 per acre.

Farm ProgressAn article in the September issue of Nebraska Farmer talks about average land values in the state 17 years ago

LAND PRICES: An article on Page 69 of the September 2005 issue of Nebraska Farmer talks about average land values in the state 17 years ago.

Why was land considered high at that time? “Stock market uncertainties continue, as do low interest rates on fixed-rate investments, causing investors to look for diversified investments,” the 2005 article said.

Land market today

Today, the most recent Nebraska survey from this past spring reported record land value numbers. The state average was $3,360 per acre across all reporting regions, an increase by an average of 16% over the past year’s numbers. Favorable commodity prices, even against rapidly rising expenses, have contributed to the increases, says Jim Jansen, Nebraska Extension agricultural economist. Statewide, center-pivot irrigated cropland rose by about 17%, with dryland crop ground increasing by between 15% and 19%. Grazing land for the 2022 report also increased from 10% to 13%.

But which region of the state was reporting made a difference in the results. The greatest increases year over year were found in the Northeast district, reporting average land values of $6,950 per acre, an increase of 21%. Next was the East district, with $8,110 per acre, increasing by 19%. The lower increase came from the North district, at $1,290 per acre, up by 11%. The lowest average price per acre of land by district was in the Northwest — basically the Panhandle counties — at $825 per acre.

Learn more about the changing land values and the 2022 report at cap.unl.edu/realestate.

 

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