Property Values of Farm Real Estate Decline For The First Time Since 1987
As commodity prices rose and demand for land for housing ate away at farm land, the American farmer saw a consistent rise in their property values. However, in 2008 the property values took a plunge as these economic factors stopped driving land prices up.
With a 3.2% drop in farm real estate values, or $2,100, farmers are joining the rest of America watching the decline of their net worth. Let us hope they are better prepared than the residential market to cope with the decline.
The U.S. Agriculture Department said in its annual report that the value of all land and buildings on U.S. farms averaged $2,100 an acre Jan. 1, down 3.2% from last year. The decline in farm real-estate values was the first since 1987, the agency said.
Farm real-estate values had been climbing steadily over the past decade, reaching record levels last year amid soaring grain prices and a growing interest in using corn and soybeans for biofuels. The rural boom also attracted speculators and investors looking to profit from the rise in land prices across the Farm Belt.
But a deflation of the commodity markets and the overall wilting of the economy are now trickling down to the farm. WSJ.com.
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Comment by M Realty on 6 August 2009:
There are too many huge factory farms that are getting federal subsidies, we need to get some grants out there so that the mom and pop farmers can come back. The US needs to become food independent just as badly as we need to become energy independent.
-Tyler
Comment by Residential Real Estate Companies on 7 August 2009:
Unless these farms are selling off property, I don’t see this as a big deal. In fact they could use it to their advantage to lower their property taxes.
Comment by Zach on 10 August 2009:
I tend to agree with the above comment. If they are not trying to sell or leverage the property this should not be a big deal. I also think that if inflation picks up commodities will come back, and this land could become relevent again with the biofuels and ethanol trend(I guess depending on your perspective).
Comment by Real Estate Investment Software on 16 August 2009:
Considering farmers aren’t usually buying and trading properties etc I don’t think this is as hard on them as it sounds.