The most popular actual property funding this 12 months could also be farmland
Posted On March 7, 2023
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Moo-ve over single-family homes: The hottest real estate investment this year may be farmland
Economists are saying a rare confluence of demographic, financial, and international agricultural trends have pushed the price of farmland sky high—and investors are taking notice.
Texas Real Estate Source examined data from the Department of Agriculture’s 2022 Land Value Report to see which states recorded the most significant growth in farmland prices from 2018 to 2022. Prices are shown as the dollar amount per acre. The report excluded data from Alaska and Hawaii, and also excluded Native American reservation land in Arizona, Nevada, New Mexico, and Utah.
Federal Reserve Bank policy advisor David Oppedahl observed in November 2022 that rising interest rates were not having much of an effect on rising farmland prices in the northern plains states he oversaw, including Illinois and Michigan.
“Farmland values overall saw a 20% increase from a year ago, with some states’ farmland values rising more rapidly than other states,” Oppedahl said.
A farm is any establishment that sold $1,000 or more of agricultural products, including government…
The biggest surge in farmland values has happened in the states that comprise the American Midwest or the Plains states. Farmland values in the Northern Plains states recorded the biggest growth from 2018 to 2022, rising more than 30%.
In parts of America’s heartland, loans for farmland carried historically below-average interest rates from 2015 to 2019. Interest rates remained low through the initial years of the pandemic and began increasing in spring 2022—and demand for loans fell steadily for much of the year.
In Oklahoma, bankers surveyed by the Federal Reserve said much of the demand for farmland was driven by marijuana growers—a booming industry that only recently became legal in the state. In Kansas, one banker pointed to COVID-19-related bailout programs and safety nets for agricultural producers as “beyond any I have seen in my ag banking experience of over 40 years and resulted in massive appreciation in farm assets.”
