Ag land value steady
WORTHINGTON -- While crop prices were on a roller-coaster ride in 2008, the price paid for agricultural land in the region is somewhere between a slight incline or a leveling off, depending on who you talk to in the business.
According to Nobles County Assessor Byron Swart, more ag land traded hands this year than in recent memory, with 24 sales recorded from January through September alone. That compares to 22 sales in all of 2007.
Of the ag land sales in 2008, the average price paid per acre was $4,083, with the lowest price paid in Leota Township at $2,660, and the highest price paid in Lorain Township at $5,500 per acre, said Swart.
"This year we've had more sales than we have in a long time," he said. "Even with the (commodity) markets going down, the (land prices) are still going up these days."
The price for corn today is nearly $3.60 per bushel, compared to a high of $7.09 per bushel six months ago. Soybeans, now at nearly $9 per bushel, sold for about $15.75 per bushel in early July.
That drop hasn't necessarily carried over into land sales, but it's anyone's guess what will happen in the first half of 2009.
"I think we saw a continuing increase in prices in the first part of the year, but we're seeing that backing off now," said Bill Weber, a broker with Jensen Management Service Inc. of Luverne. He attributes the "backing off" to the drop in commodity prices as well as the overall financial crisis seen in September and October.
"I think there's still some good prices being paid right now out there," Weber said. "We're probably past the peak, I think. Whether that's the start of a longer trend, or if this is a market correction ... I'm not sure."
Jensen Management Services has sold land this year in the four counties of far southwest Minnesota. Of those sales, Weber said the price per acre ranged from a low of $4,350 in Nobles County, to a high of $7,800 in Rock County. About half of those were 1031 exchanges, where the buyer was purchasing land for tax purposes after selling land elsewhere.
"There are a lot of localized situations, too," Weber said. "The right piece of ground, the right potential buyers and you are still going to have situations that decide what the trends are."
Still, Weber said prices for land today have dropped off to where they were at the end of 2007 -- with highs in the neighborhood of $6,400 to $6,500 per acre.
Duane Mulder, owner of Duane Mulder Auction and Realty of Luverne, said a sale earlier this month garnered $5,400 per acre in western Rock County.
"It's hard to tell (where prices are headed)," said Mulder. "We're going to test the market again after the first of the year and then we'll know."
With three land sales scheduled in January, Mulder said whether land prices start to fall off is anyone's guess.
"I'm not sure what the future holds," he said.
Steve Prins, an auctioneer and appraiser with Prins-Sliver Auction Service in Worthington, said they saw about an $800 per acre adjustment in the latter part of 2008 compared to what land was selling for during the summer.
"It's a little softening, but we still have terrific prices," he said. The business sold several parcels for 1031 exchanges this year, as well as to out-of-state investors hailing from as far away as Washington state.
"I don't think they're buying that Iowa farm ground because it's too high priced," said Jack Sliver, the other half of Prins-Sliver Auction Service. "They've moved into Minnesota from outside the area."
Sliver said they had a "pretty active" fall in terms of ag land sales.
"I don't know what the spring is going to bring," he said. "I think it's going to depend on these crazy commodity prices."