Illinois Farmland – Have you heard?
As referenced the last two months; Buying or selling real estate in today’s market requires owner(s) or prospective owner(s) to understand more than just the comparative value of the investment they are about to transact. Last month we explored timber with Timberland Realty. This month we will look at Farmland with Stephanie Spiros, managing broker with Ag-Exchange Inc. and Participating broker with Cabela’s Trophy Properties.
Illinois farmland prices surged 20% on average during 2011. Most of this move in land values can be attributed to the increase of farm income and an optimistic outlook for future returns on the farm.
The Illinois Society of Farm Managers and Rural Appraisers recently released their report that supported this price increase across various land classes. Farmland with excellent productivity was estimated at $8,690 an acre at the beginning of 2011. But by year’s end, it had risen to $10,460 per acre. Similar increases were seen for other grades of farmland: Good productivity land rose from $7,490 to $8,980 an acre. Average productivity land surged from $6,080 to $7,330 and Fair productivity land rose from $4,880 to $5,900 an acre.
Compared with previous years, this 20% increase was a staggering leap. On average, between 1970 and 2011, the average yearly increase was 6.7 percent. Recent years have produced higher increases, with 2005-2011 averaging 12 percent.
The Society reported that the top price of $13,000 per acre was paid for 37.7 acres in Christian County. Many question how this level of farmland prices can be sustained, but cash rents for farmland are also going up. Rents for excellent quality farmland rose from an average of $319 per acre to $379 an acre this year. There are some large farm operators paying in the $500 per acre range, although these leases are generally short-term and require the land to hold strong fertility levels.
Land values and lease trends are expected to stay strong as long as crop income levels remain steady or increase. Supporting this optimistic outlook is the indicator that farmers make up the majority of buyers. Often those buyers are adjoining landowners or current tenants. Improved crop genetics have increased yields, and this alone improves the earning potential for the land. Most of the land being sold is in transition, with heirs or estates selling to accomplish their needs. Other farm sellers may have their eye on more appealing acres, either due to better soils or proximity to other land owned. Whatever the reason for selling, there are plenty of buyers “waiting in the ditches” to seize an opportunity to purchase.
Stephanie has been focusing on farmland and acquisitions since becoming a licensed real estate agent in 1995. After graduating from Purdue University with a Bachelor's degree in Law, Stephanie worked 2 years on the grain floor of the Chicago Board of Trade. In 1994 she left Chicago to join her family's farm operation that produces corn and soybeans in 14 counties of Illinois and Indiana. She still maintains her management role in that operation with her responsibilities including grain marketing and fertilizer sales. A member of the 1998 Illinois Agricultural Leadership Program, Stephanie was chosen to participate in developing leadership skills for domestic and international agricultural policy. She traveled to Brazil, Chile, and Peru, meeting with members of each country's Department of Agriculture. email@example.com www.ag-exchange.com
Cabela’s Trophy Properties is a worldwide network of recreationally orientated Land Brokers with regional expertise in, Ranch and Farm, Timber, Waterfront, Auction and Land Owner Services. We are a proud supporter of the Realtors Land Institute. www.cabelastrophyproperties.com contact Derrick Volchoff, ALC firstname.lastname@example.org