Farmland Is Now a Hot Commodity
Farmland Is Now a Hot Commodity
Across the Midwest, farmland prices are rapidly climbing, fueled by a recent rally in grain markets and low interest rates, The Wall Street Journal reports. Prices are rising even higher than the previous farm boom about a decade ago.
Farmland values increased during 2020 as higher grain prices buoyed revenue for farmers. Land prices in the region that covers parts of Illinois, Indiana, Iowa, Michigan, and Wisconsin saw a 6% increase last year, which marks the largest hike since 2012, according to the Federal Reserve Banks.
Prices for farmland are expected to continue to rise this year. A recent survey of Iowa farmland specialists conducted by the Iowa chapter of the REALTORS® Land Institute shows average farmland values were up nearly 8% since September.
Farmers eager to cash in are selling parcels of land, leading to an investor shopping spree. Large farmers dominate among owners of the nation’s 900 million acres of farmland. Seventy-five percent of cropland in the U.S. is controlled by about 13% of the nation’s farmers. Smaller farmers are finding it more difficult to afford a down payment on land parcels or compete for land leases, the Journal reports.
Indeed, competition is fierce as supply for farmland remains low. U.S. farmland has decreased by 25%—or 305 million acres—since 1950, according to USDA data. Investors are scooping up farmland: Pension and hedge fund companies view it as a lucrative alternative to stocks and bonds.
Source:
©National Association of REALTORS®
Reprinted with permission
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