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SLIGHTLY LOWER: Land prices may be slightly lower in the coming year.

Land value outlook: Gradual decline to continue

Lower farm income a factor in sagging land prices.

Farmers National Co. is out with its midyear land outlook, and it’s a mixed bag.

“The trend in today’s land market is hard to discern as some sales bring a better-than-anticipated price, while others may show a decline in value from previous sales,” says Randy Dickhut, Farmers National Co. senior vice president of real estate operations.

Dickhut says land values can be expected to continue to gradually decline over the next several years, if commodity prices and the underlying farm incomes remain at current low levels.

Small interest rate increases, tax law changes and world economic uncertainties will pressure land prices in the coming year.

An increase in the number of properties for sale, caused by financial stress in the ag economy, could hurt land prices.

If we have limited stress sales and no other shocks to the markets, land values will move to stabilize, he says.

More Dakota insight
Land values in the Dakotas and Minnesota continue the gradual decline seen in the past few years with good-quality land barely moving lower and land of average or less quality declining further, says Brian Mohr, area sales manager, Garreston, S.D.

Investor interest in cropland is increasing, and these buyers are competing against farmer buyers who, as a group, make most of the agricultural land purchases. Lenders are growing more cautious in working with farm and ranch borrowers as grain and livestock prices remain low.

“We have buyers looking for distressed sales of farmland at lower prices, but we have not witnessed that in our area so far.”

For more information
Farmers National Co., an employee-owned company, has sold more than 3,800 farms and more than $2.44 billion of real estate during the last five years. The company manages more than 5,000 farms and ranches in 28 states comprising more than 2 million acres. Additional services provided by the company include auctions, appraisals, insurance, consultation, oil and gas management, lake management, a national hunting lease program, forest resource management and FNC Ag Stock. For more information, see farmersnational.com.

Source: Farmers National Co.

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