Cape Coral, FL | The USDA's recent land values survey indicates that the average value of farm real estate has risen by 7.4% compared to the previous year. Farm real estate encompasses all land and buildings on farms. The 2023 Land Values report from the USDA reveals that the average value per acre of farm real estate has increased from $3,800 in 2022 to $4,080 in 2023.
The average value of cropland has gone up by 8.1%, while the average value of pastureland has increased by 6.7%.
The report also provides region-specific data on farm real estate values:
Pacific: The Pacific states (California, Oregon, and Washington) have observed a 3.3% increase in farm real estate value, averaging $7,270 per acre.
Southeast: The Southeast region (Alabama, Florida, Georgia, and South Carolina) has seen a 5.7% increase in farm real estate value, averaging $4,840 per acre.
Mountain: The Mountain region (Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming) has experienced a 4.3% rise in farm real estate value, reaching an average of $1,450 per acre.
Northern Plains: Farm real estate in the Northern Plains (Kansas, Nebraska, North Dakota, and South Dakota) has surged by 13.7%, with an average value of $3,160 per acre.
Corn Belt: The Corn Belt region, which includes states like Illinois, Indiana, Iowa, Missouri, and Ohio, has seen a 7.1% increase in farm real estate value, reaching an average of $8,100 per acre.
Northeast: Farm real estate in the Northeast has improved by 3.9% year-over-year, with an average value of $6,740 per acre.
Lake States: The average value of farm real estate in the Lake States (Michigan, Minnesota, and Wisconsin) has risen by 8.2% to $6,450 per acre.
Appalachian: Appalachian states (Kentucky, North Carolina, Tennessee, Virginia, and West Virginia) have experienced a 7.8% increase in farm real estate value, reaching an average of $4,980 per acre.
Delta States: The Delta region (Arkansas, Louisiana, and Mississippi) has witnessed a 1.8% improvement in farm real estate value, with an average of $3,400 per acre.
Southern Plains: Oklahoma and Texas have seen a substantial 9.4% increase in farm real estate value, with an average of $2,800 per acre.
Overall, the USDA's report highlights an upward trend in the value of farm real estate across various regions, indicating positive developments in the agricultural sector. View the full report HERE.
Over the last decade in the United States, trends in farmland value have been influenced by a range of factors. Here are some key patterns specific to the U.S. context:
Consistent Appreciation: Generally, farmland values in the U.S. have experienced steady growth over the past decade. This appreciation can be attributed to factors like increasing global demand for agricultural products, limited availability of quality land, and the attractiveness of farmland as an investment.
Commodity Price Impact: Fluctuations in commodity prices have played a significant role in shaping farmland values. When agricultural commodity prices are high, farmers' income rises, creating higher demand for land and contributing to increased land values. Conversely, declines in commodity prices can impact land values negatively.
Low Interest Rates: The U.S. has seen a prolonged period of low interest rates. This has encouraged farmers and investors to consider acquiring more farmland due to favorable borrowing conditions, which in turn has supported upward pressure on land values.
Investment Interest: Farmland has gained traction as an appealing asset for institutional investors, pension funds, and other financial entities in search of portfolio diversification. This heightened demand from investors has contributed to driving up farmland values.
Technological Advancements: Advances in agricultural technology have improved the productivity of farmland across the U.S. Precision agriculture, data-driven insights, and advancements in crop genetics have all boosted yields and enhanced the value potential of farmland investments.
Government Policies: U.S. government policies related to agriculture, land conservation, subsidies, and environmental regulations have influenced farmland values. Policies that promote agricultural growth or limit land development can impact supply-demand dynamics and consequently influence land values.
Regional Variation: Farmland value trends can diverge significantly by region within the U.S. Factors such as local economic conditions, population growth, urbanization patterns, and water availability all contribute to the unique trajectory of farmland values in different parts of the country.
Environmental Considerations: The growing emphasis on environmental sustainability and conservation has introduced new considerations into the value of farmland. Factors such as carbon sequestration potential, water management capabilities, and conservation practices can influence land use decisions and impact land values.
Market Cycles: Farmland values, like any real estate market, are subject to cycles. Periods of rapid appreciation can be followed by stabilization or slight declines in response to economic shifts.
Demographic Changes and Land Transfer: The demographic landscape of farmers and landowners in the U.S. has been shifting. As older farmers retire or pass on their land, a generational transfer of farmland ownership is taking place. This transition can impact farmland values as younger farmers, investors, or non-farm entities enter the market with different goals, financial capabilities, and approaches to land management. This demographic shift can influence the supply and demand dynamics for farmland and thereby contribute to changes in its value.
It's important to note that these trends are a general overview of the U.S. farmland market and can vary across states and regions. For the most accurate and current information on farmland value trends in the United States, it's advisable to refer to up-to-date sources such as USDA reports, agricultural publications, and real estate analyses specific to the U.S. agricultural sector.
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By Chrissy Wozniak | North American Ag
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