Land prices on the rise in Nobles County

Talk about it

WORTHINGTON — Surrounded on the north, east, south and west by counties who have had double-digit per-acre land sales in the last year, Nobles County is just now starting to catch up.

Of the 31 qualified recorded land sales between Oct. 1, 2011, and Sept. 30, 2012, Nobles County Assessor Joe Udermann said the highest price paid per acre of Class 2A land (bare, tillable land of 34.5 acres or more) was $9,206. Since then, the local office has heard of sales in the county of $11,700 per acre and $12,500 per acre. Both of those, as well as other sales recorded in the next nine months, are expected to drive next year’s land values even higher.

“It kind of shows you that land values are continuing to increase,” Udermann said.

While Udermann said there are “plenty of sales out there” to analyze when it comes to setting market values, there weren’t as many sales in the 2011-2012 reporting period as there have been in recent years.

Using the assessor’s calendar for recorded sales between Oct. 1 and Sept. 30, the period from 2010 to 2011 showed 46 sales of bare agricultural land. There were just 21 sales from 2009 to 2010, but from 2008 to 2009 there were 44. The highest number of sales came five years ago, during the 2007-2008 reporting year, when 53 bare ag land sales were recorded.

In the 2007-2008 reporting year, the average price paid per acre of bare agricultural land was $4,083, and the highest price paid that year was $5,500 an acre.

It was unprecedented to see land sales reach that high back then, and now land is selling for more than double those highs.

“We’re on a $6,062 average for tillable acres,” Udermann said. “We’re seeing a lot of sales that will be coming in at $9,000, $11,000, $12,000 an acre.

“You have Rock County and Murray County with $15,000 and $16,000 sales,” he added. “Does that affect our market? Well, they’re cross counties.”

There was also a $20,000-per-acre land sale in northwest Iowa last year.

“Everyone around us is with those values,” Udermann said. “You talk to a lot of assessors, and it’s the same as what we’re seeing.”

Up, up and away

Alan Cox, owner and broker at Cox Realty & Land Services at Adrian, said it’s anybody’s guess as to how high land prices will go.

“I thought by now it would have leveled off, but it seems like the interest is still very strong,” he said.

Cox sees two things driving the price of land — the farm economy and low interest rates on borrowing.

“With the farm economy, there’s probably more cash out there and people are able to put more down on a farm,” he said.

In addition to appraising and selling land, Cox is also a farmer. He said he is surprised by how high the prices have climbed for agricultural land.

“The farm economy has been wonderful the last five, six years, and that’s really driven this market,” he said. “Good quality land that produces well is really an asset to these guys.”

Cox said the majority of the land he’s sold has been purchased by local farmers, and while it may be a “little tougher for the younger generation” to enter production agriculture with the high price of land, Cox said most family farmers are able to help their kids get started.

“Typically the ones that are selling are, if Mom and Dad have passed away, the heirs are looking at selling at these prices,” he added.

Randy Buntjer, owner of Buntjer Auction and Appraisal Company, also said many of the sales he, along with business partner Duane Mulder Auction Service, have handled have been for estate purposes.

Just in the last two months, Mulder and Buntjer have handled sales ranging from $9,175 per acre in Nobles County to $15,300 per acre in Rock County. They conducted a land auction in Murray County in November that had land sell for $10,250 per acre.

Buntjer said a lot of land changed hands in 2012 because landowners feared a 2013 increase in the capital gains tax, and most of the buyers were local farmers.

“We’re not seeing hardly any young farmers buying land,” he said. “I would say mostly my age (40s) or older.”

While neither Buntjer nor Cox have a crystal ball to predict how long land prices will continue to rise and just how high they will go, neither sees the price dropping out any time soon.

“I think ag land prices are going to stay strong,” Buntjer said. “As long as we have the low interest rates and commodity prices stay high, these land prices are going to keep going up.”

Property values

keep rising

It’s the role of the assessor’s office to keep property values in line with recently recorded land sales. Udermann said the value his office places on land needs to be within 90 percent to 105 percent of what each parcel of land might actually sell for. It’s a difficult task when the price paid for land is a moving target.

“If we don’t raise the value to an acceptable limit, the state equalization (board) will raise it,” Udermann said. “In a deflationary market, it’s probably easier to do some of these time-ward adjustments because you’re projecting downward. In this market, you’re projecting upward.”

The value placed on Nobles County tillable agricultural land rose 25.51 percent in 2012, and Udermann doesn’t see it going down in 2013 based on the sales that have already occurred.

“We’re definitely going to see an increase,” he said. “I think if you’re farming or have gone to these auctions, or bought and sold land, you know that land is going up substantially.”

Though a bit tongue-in-cheek when he suggests being nice to the county assessor, Udermann has to deal with some people who aren’t enthusiastic about the rising price of agricultural land.

“We’ve heard from a few people, those who are locked into a long-term rental agreement,” he said. “Some (others) are just questioning how land can go up that fast and who’s buying it. Quite honestly, I think a lot of people look at the increase and think, ‘Wow.’”

Retired landowners who can raise the rent are doing so to help cover the cost of their rising taxes.

“In the end, they’re concerned about what they pay in tax,” Udermann said.

Daily Globe Reporter Julie Buntjer may be reached at 376-7330.

Tags: nobles county, news, agriculture, farm