Land Market Update

December 19, 2013

Over the past several years, we have experienced unprecedented commodity prices, land values, and net farm income. As you well know, the lower commodity prices we’ve experienced the past sever-al months have caused concerns, assumptions are being made, and questions are being asked, “What are land values doing? Have we seen them peak? Is the bubble burst?” The results of our recent auctions indicate buyers are cautious and discerning. Values remain strong for quality property. Values show softening for marginal property. As long as interest rates remain low along with the past several years of strong farm income, land values will remain stable except in situations where higher and/or softer prices will be paid due to location, quality, and who owns property within the immediate area.The other key to the stability of the land market is interest rates. Land values have not only increased due to higher net farm income, but also due to the demand created with buyers having cash in hand, ability to borrow at lower interest rates, and a limited number of properties for sale. What do sellers do with the money once they sell their property? This is the main reason for the limited number of properties for sale. Why sell with rents earning more than what can be earned on CD’s?With all this being said, landowners are at a crossroads. Whether you are considering selling, buying, and/or just filling out your financial statement, what land values should you use? Whether we want to admit it, we knew higher commodity prices would not last forever. If you are considering selling, do I sell now to take advantage of the higher land values? If you are considering buying, how much do I adjust what I pay due to reduced cash flow and/or depletion of my cash reserves? If you are at this crossroads and considering selling farm property, you may only have one chance to do it right. There are other brokers who will do a fine job. But if you expect more, consider Reck Agri Realty & Auction. I invite you to review, within this newsletter, the summary of properties we have sold this past year, press release of our new office location, and the testimonials from past sellers.

Marc Reck
Reck Agri Realty & Auction