After stalling in the middle portion of 2023, the last six months of land values showed resilience. Farmers National Company attributed the performance to commodity prices and the just how much cash was in farmers' pockets.
2023 Ends in a Flurry of Resiliency in Land Values
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Farmers National Company attributed the performance to commodity prices and the just how much cash was in farmers' pockets.
Transcript
Resiliency summarized the sale of farmland over the last six months of 2023 according to Farmers National Company.
Paul Schadegg, Senior VP of Real Estate Operations, Farmers National Company: The input costs have settled somewhat, but they're still pretty pricey. And so even with all those factors, we're still seeing land values maintain the levels that they've increased over the past three years.
Schadegg, the company's Senior VP of Real Estate Operations, says the late rally came after a summer slowdown in land sales.
Paul Schadegg, Senior VP of Real Estate Operations, Farmers National Company: “We got into the end of August, early September, and it's like they kicked it in high gear. And we had one of the strongest, well, maybe the strongest September we've ever seen as a company. that allowed a lot of these operators to get into harvest, understand that they had better yields than they anticipated.
Traditionally, higher interest rates slow the sale of farm land and other big ticket items.
Paul Schadegg, Senior VP of Real Estate Operations, Farmers National Company: We're finding out how much cash people have in their pockets, and it's more than we thought. However, I'm gonna say that going into 2024, where we're already seeing an increase in lending, and along with that, those higher interest rates, so operators are gonna have some additional expense to pay in the form of interest rates on a land loan. And then just the fact that they're going in and there's a higher volume of requests for loans.”
Schadegg adds the increase in demand for lending could change the way a sale ends.
Paul Schadegg, Senior VP of Real Estate Operations, Farmers National Company: I think that we're going to start to see more ‘no sales’ because of that. And the no sales are a combination of, you know, we're a little bit too ambitious on what we think that land is going to bring today. It's still bringing record values than what we've seen in the past 25 years.
Commodity markets, like always, are the key driver in keeping land values at a higher level.
Paul Schadegg, Senior VP of Real Estate Operations, Farmers National Company: There are still simply more motivated buyers than there are willing sellers. It's just as simple as that. And that's where that competition is created and will continue to be created.”
For Market to Market, I’m Peter Tubbs.
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