2018 USDA Land Value Report

Agricultural Land Values Highlights

The United States farm real estate value, a measurement of the value of all land and buildings on farms, averaged $3,140 per acre for 2018, up $60 per acre (1.9 percent) from 2017 values. Regional changes in the average value of farm real estate ranged from an 8.3 percent increase in the Southern Plains region (includes Texas (9.1% increase) and Oklahoma (5.3% increase) to 1.4 percent decrease in the Northern Plains region. The highest farm real estate values were in the Corn Belt region at $6,430 per acre. The Mountain region had the lowest farm real estate value at $1,140 per acre.

This report from the USDA is a 22 page report.  Read the full report here.

Land Transition Can Lead to Unintended Consequences

Land Transition Can Lead to Unintended Consequences
by Allan Vyhnalek, University of Nebraska Extensions

Grandpa and Grandma farmed. They retired. They had two irrigated quarters. They had two sons who had started farming operations themselves. So, their transition plan was to give a quarter to each of the sons at their passing. Grandpa passed away, followed by the Grandmother about a year or so later. The lawyer handling the estate was not given specific instructions about the transfer of the quarters. He just put number one and number two in a hat, the sons drew a number.

Then there were problems. Turns out that one quarter was nearly perfect. Good soil, highly productive, and had a good well. The second quarter was sandy, alkali spots, significantly less productive and had a well that was in trouble, actually sucked air at times. There was a huge argument about being fair. One son felt it was fair that each got a quarter. The son who got quarter two didn’t feel like he was treated equitably at all.  See Entire Article

 

What the New Tax Law Means for Agriculture

New article May 16, 2018 by Farm Credit Bank of Texas (land.com)

The largest overhaul of the U.S. tax code in three decades went into effect this year, impacting farmers, ranchers and other rural landowners in a variety of ways. For the most part, financial experts anticipate benefits for these groups.

“The 2018 tax law changes include several items that I feel will be beneficial to agricultural producers,” says Burl Lowery, a Brownwood, Texas, certified public accountant and director of Central Texas Farm Credit. “The increase in the exemption in estate and generation-skipping taxes to $11.2 million in 2018 will allow more farmland to be passed to future generations with less or no estate tax.”  READ ARTICLE

Investing in Land for Retirement

March 8, 2018 Realtors Land Institute

Choosing how to save for retirement can be a decision that takes years. After all, that’s the money that you’ll be living on during your golden years. Most people stick to 401ks and stocks, but what many people don’t know is that you can invest in land real estate to save for retirement. Investing in land real estate can be a great way to save money long-term, but with any investment, you need to know what type of land to invest in, what sort of returns you can expect, and what to avoid when investing in land real estate.

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Texas Bankers Speak Up on Land Values

Agricultural Survey…Quarterly Survey of Agricultural Credit Conditions in the Eleventh Federal Reserve District. The Eleventh Federal Reserve District consists of Texas, northern Louisiana, and southern New Mexico.

The survey shows, dryland and ranchland values both increasing while irrigated land values dropped. See the entire report here.

Thoughts on Interest Rates and Land Sales

by Stephen Donnell, SR VP Lending, Plains Land Bank, Amarillo, TX

Plains Land Bank logoInterest rates have been about as volatile as the commodity markets in recent months. Our long term interest rates have moved up and down over three-tenths of a percent since March. Some months, it appears the Fed’s increase in short term rates is pushing long term rates higher, only to see those rates fall back the next month. Very hard to predict. We have had a number of customers recently locking in some long term money to hedge against rising interest rates. That appears to be a sound strategy, especially if you can catch a dip in rates.

As to land sales, land prices and buyer interest, it just flat depends on where you are. Areas of the Panhandle have seen some softening of land values and there are farms for sale.  In other areas, the values have not backed off much, and there are very few farms listed for sale.  The “crash” in land values that some feared a couple of years ago has yet to materialize, and loan demand here at Plains Land Bank is running ahead of last year.   

 

Never Buy Land Without an ALC

Never Buy Land Without an ALC…. 4 reasons from an article on Land.com written by Luke Worrell, ALC

This article outlines 4 of the reasons you should never buy land without an ALC (Accredited Land Consultant)…..Trust….Skill….Knowledge…Connections.

“When it comes to selling land, I am absolutely convinced that ALCs are the best in the business.  For starters, you can only become a designated ALC after you have proven yourself in the field.”

Read the entire article here.

Developments in 2016 Texas Land Markets

Clift Land Brokers was well represented at the 27th Annual Outlook for Texas Land Markets in San Antonio in April. As usual, a lot of great information came out of this conference. One highlight was the presentation by Dr. Charles E. Gilliland,  PhD, Research Economist for Texas A & M University Real Estate Center on Texas Land Values. Click here for a copy of that presentation. 

While 2017 1st quarter land values were up statewide 1.8% over 2016 4th quarter, and while other regions showed an increase, Region 1 – TX Panhandle and South Plains Region was down 3.4% over the end of last year. There was too much good information to cover on this forum, so be sure to download Dr. Gilliland’s presentation.

Texas Land Value Trends 2016

A Positive Take On Land Values

Expect Land Equilibrium

Marcia Zarley Taylor, DTN Executive Editor

LOUISVILLE, Ky. (DTN) — U.S. agriculture could dodge the long-feared collapse in farm real estate prices this commodity cycle, contend economists, lenders and appraisers attending a Farm Foundation meeting this week. But some cautioned the bubble more likely to burst will be used farm equipment values over the next year if profit margins don’t improve.

“Land values haven’t seen near the pullback that everyone predicted,” observed Bruce Sherrick, director of the TIAA-CREF Center for Farmland Research at the University of Illinois. That moderation makes sense, he added, given that farmland investors keep a long-term perspective on value despite blips in day-to-day commodity prices.

“Land investors’ expectations of future income are more like climate, not weather,” Sherrick said. If it rains too much one season, it doesn’t mean the climate has changed, he said, any more than an abrupt correction in commodity prices necessarily undermines farmland values with a 30- to 50-year history of double-digit appreciation.

“The old saying is that economists have predicted nine of the last five recessions,” Sherrick said. “The farmland bubble has been over predicted as well.”

Randy Dickhut, a senior vice president and head of appraisals at Omaha-based Farmers National Company, agreed, describing the market as balanced. After studying recent sales in the more than two dozen states where the company operates, “what we’re seeing in farmland is an equilibrium between buyers and sellers, not a bubble,” he said.  READ ARTICLE