Farm Prices: What Happened in 2014?
by Matthew Roberts, Certified General Real Estate Appraiser
Over the past few years, prices for tillable farmland have increased substantially. However, in 2014, the frenzy seemed to fizzle out. Throughout the year, many speculated that prices had leveled off or even declined. Some very big changes happened in the market last year, but concluding what actually took place may be something that is disputed long into 2015.
To give you some idea of market trends, I have analyzed sales from Adams and Hancock Counties in Illinois and from Lewis and Clark Counties in Missouri. Price per acre of tillable cropland tends to be higher in Illinois, but the change in prices on each side of the river moved in the same direction. From 2012 to 2013, in Adams and Hancock, the average price per acre of farmland and tillable land types increased by 15% to 30%! Comparing 2013 to 2014 indicated very different results. Average prices actually showed a decrease of 7%-12%. From 2012 to 2013, in Lewis and Clark, the average price per acre of farmland increased anywhere from 3% to 10%. From 2013 to 2014, average prices decreased by 2%-7%.
But at the same time, another trend began in the market which may have dramatically affected average land prices. The big change between 2013 and 2014 was the number of sales. The number of sales was much lower in 2014 than previous years. Not only that, there were far fewer sales of the highly productive farmland than in 2013. Comparing 2014 to the previous year, on both sides of the river, showed that there were as many as 50% to 80% fewer sales of high quality tillable land types. Having fewer sales of the highest quality farmland in 2014 may have resulted in downward pressure on average land prices. Regarding the notion that the market for farmland had ‘fallen off,’ 2014 may not have been the year. It seems that last year, prices did not necessarily decrease, but there were less sales of high quality farms. When these types of farms did sell in 2014, their sale prices were still strong. Taking this into consideration, farm prices could possibly be relatively stable.
Understanding various market trends can greatly contribute to an accurate appraisal of agricultural properties. At Spurgeon Appraisals, our customers are familiar with our professional level of detail and analysis in our reports. We are well qualified and equipped to meet your appraisal needs.
Spurgeon Appraisals regularly appraises a variety of property types. We have experience appraising farms, residences, and commercial properties. We pride ourselves on providing excellent customer service and quality appraisals. Contact our team to see how we can meet your appraisal needs and exceed your service expectations.
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