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Quality is King for U.S. Farmland Buyers Keeping Prices Near Their Peaks

Thu, Jun 3rd, 2010
Posted in Agriculture

Despite the uncertain mood still present in many economic sectors, the U.S. farmland market remains steady to strong thanks to continued investor interest in high quality land. In recent months, the demand for high quality farmland has increased, which has driven up prices for top quality properties.

"Land is still a good investment for buyers, but they want the high quality properties that hold value," said Lee Vermeer AFM, ALC, vice president of real estate operations at Farmers National Company. "We are seeing values on the top quality ground at or even above the peaks we saw in 2008. In some cases, it's beyond that point, above the $7,000 per acre mark. The market for these properties is strong and, based on economic indicators, we project that to continue."

Vermeer added that the desire for high quality investments continues to push buyers away from the less productive land. Properties that are only partially tillable or have nonproductive soils are moving slowly and more time is needed to complete sales.

"Fewer landowners are willing to sell their property today leading to fewer listings," according to Vermeer. "Fewer farms or ranches for sale, along with strong buyer interest, have helped to fuel the recent strength in the market."

Iowa and Minnesota

A huge divergence in prices exists in the Iowa and Minnesota area. According to Sam Kain ALC, GRI, ABRM, area sales manager for Farmers National Company in Iowa and Minnesota, high quality land is bringing up to $7,000 an acre or more in Iowa and nearing $6,000 in Minnesota, while lower quality parcels are drawing minimal interest and coming in at much lower prices.

"Buyers are willing to pay top dollar for quality land," said Kain. "However, there seems to be little interest in lower quality and recreational properties."

Kain added that average land is moving, as long as the price is right. However, he said bidding wars are a thing of the past for these types of properties. High quality land, on the other hand, is drawing interest from more aggressive investor and farmer buyers; but Kain said "One of the problems we have right now is that there is not a lot of land for sale of any quality."

For more information on land listings in your region, visit the Farmers National Company website at www.FarmersNational.com

Farmers National Company, an employee-owned company, is the nation's leading agricultural real estate and farm and ranch management company. The company has sold over 2,000 farms and more than $1.25 billion of real estate during the last four years. Farmers National Company currently manages more than 4,500 farms in 23 states. Additional services provided by the company include appraisals, insurance, consultation services, oil and gas management, lake management, and a national hunting lease program.

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