While demand for rural land remains fairly strong, prices will stabilize across the whole country, with some slight declines in lower land classes.
That’s the view of Paul Schadegg, senior vice president of operations at Farmers National Company and a veteran in rural real estate who has tracked rural land values for the past 25 years.
Schadegg said he is seeing price decreases of up to 5% for lower land classes. As buyers, he said, local farmers are “seeing some stress.” High input costs and lower commodity prices are driving this stress. Farm input costs remain high even as they have leveled off.
In certain pockets, high-quality land still sees aggressive bidding. New buyers of rural land include investors and investment groups. “We are seeing lots of inquiries from investment groups,” he told High Plains Journal.
Water availability noted
In the West, water right constraints have been limiting some types of development while providing opportunities for others. Schadegg mentioned residential and commercial development along the front range of Colorado, where irrigated land once utilized for agriculture finds the associated water rights to be used for development become more valuable than the land it sits under.
“In western Kansas, the Texas panhandle and eastern Colorado, water definitely affects land values,” Schadegg said. “Investment groups don’t want to deal in water-restricted land unless they can be shown that the land is productive under restrictions.”
Lower commodity prices are contributing to producer stress. Schadegg noted that the most corn in bins in the past 25 years is helping to keep prices down. He said it took rural land values 15 to 20 years to recover from the crisis of the 1970s. After that, rural land values have followed a rough five-year cycle in which their prices stair-step up before settling at a plateau. He said, “They will probably settle here for a year or two.”
David Murray can be reached at [email protected].
