2nd Quarter Land Market Update
Northern two thirds of Indiana, East Central Illinois, and Michigan
Overall, there has been continued stability in land values, with specific regions still experiencing strong sales. Areas that are weaker or lower in quality, as well as those saturated with sales over the past two years, have shown signs of price reduction in some cases.
Mid-Summer – Supply/Demand Economics 101:
Currently, there is a low volume of farms on the market, typical for this time of year. This has contributed to values remaining steady, contrary to expectations of decline, driven by strong demand from 1031 exchange buyers, cash buyers, and outside investors. Local farmers and landowners are feeling pressure to pay higher prices or risk seeing neighboring land bought by outsiders.
Indicators such as interest rates and declining commodity prices would typically suggest declining land values by now, but in most areas, this has not yet occurred.
Buyer Sentiment:
Farmers and other non-cash or non-1031 exchange buyers are struggling to justify the current selling prices. Many local buyers have negative attitudes toward the market, believing prices should be lower despite recent sales data indicating otherwise.
A potential concern for later this fall and winter is the impact of sustained higher interest rates and lower commodity prices, as demand from 1031 exchange and cash buyers may diminish. This could lead to a mismatch between seller expectations and buyer willingness to pay. Already, some landowners with lofty price expectations are not finding buyers willing to meet them. Additionally, there is growing concern about misleading advice and inflated valuations provided by some land professionals, which sets unrealistic seller expectations.
2nd Quarter Sales:
5/22/24 – 122.6 acres – Clinton County, IN – $1,717,100
5/29/24 – 160 acres – Crittenden County, AR – $1,725,000
6/20/24 – 75.8 acres – Tippecanoe County, IN – $1,667,688
6/20/24 – 80 acres – Parke County, IN – $1,000,000
Essential Reading:
Grain prices have fallen considerably since the start of 2024. This article from Farm Policy News, a publication through the University of Illinois, describes the recent trends in the grain markets and what that could mean for profit margins in the 2024 crop year.
Grain Prices Hitting Lowest Levels Since 2020 – Farm Policy News (illinois.edu)
The Indiana State Department of Agriculture (ISDA) recently conducted a study which showed that Indiana has lost a total of over 345,000 acres of farmland between 2010 and 2022. The full report can be found here:
