Nebraska agricultural land values see increase
By Jacob Bryant, NewsNetNebraska
After years of steady growth, agricultural land markets in Nebraska remain relatively stable according to a preliminary report by Cornhusker Economics.
The statewide average farmland value rose around 5 percent overall, as of Feb. 1, to $3,195 per acre. Jim Jansen, a research analyst with the University of Nebraska-Lincoln, conducted the research for Cornhusker Economics.
“The annual survey goes out in the mail about mid-January of each year,” Jansen said. “The results we ask for are rates and estimated land values.”
Jansen said that the results they found saw that the weighted value of agricultural land had gone up about 5 percent which is still an increase but not as much as recent years have seen.
“For row crop production, corn, soy beans, wheat the value of those commodities in prior years had been exceptionally high,” Jansen said. “Record prices for grains, that are the main stakeholds of farms across Nebraska, translate into record cash prices. We see a little bit of those values soften and you see the real estate start to soften.”
Jansen pointed out that when he said softening of land values he meant that instead of seeing the 20 to 30 percent increases over a year we are seeing smaller increases like 5 percent.
“Really we are just seeing the market stabilize,” Jansen said. “I would term it as a steady year.
Roger Wilson, a farm management and enterprise budget analyst and UNL, doesn’t find that it is quite different than in previous years.
“The land values are up although there are some exceptions,” Wilson said. “Which is quite a change from the last few years when they were all up a lot.”
The factors that go in to the increase or decrease of the value of land is tied very closely to commodity prices. Wilson said that as the commodity prices this year went down the land market prices stopped going up.
“It’s real rare for land markets to go down,” Wilson said. “Generally they go up, and if the price of the commodities are high they go up faster and if the commodity prices are lower they don’t go up as fast.”
Jansen also explained how the factors affect the land owners and how they do business.
“You have only so much money to spend on purchasing something a year, whether it’s a car, a house, a track of land,” Jansen said. “You’re kind of bidding into the value. You can buy more house, you can buy more car, you can buy more land with lower interest rates. The two big things are the value of commodities and the availability of credit.”
Wilson said that for the land owners themselves, the value of the land doesn’t mean a whole lot.
“There’s not very much land that changes hand per year,” Wilson said. “Most of the people that own land own it for a long period of time. What the value of the farmland going up impacts is the ability of the people to purchase land and right now purchasing land is difficult.”
When the value of land goes up, be it a large amount or a small amount, a bump in taxes is sure to follow. As the value on the agricultural land continues to grow, their owners feel more of the tax man’s squeeze.
“Our survey generally is an indication of what is going to happen tax-wise,” Wilson said. “This year we are showing our values go up a little bit. That’s kind of a function of timing. Those increases in land values are going to change the proportion of the taxes that farmers pay. If farm values go up substantially and residential values don’t then that means the farmers will be paying a larger proportion of the taxes.”
Jansen wanted to stress over and over again the importance of value on property, whether it is land value, car value or home value.
“The value of agricultural land matters in the state of Nebraska,” Jansen said. “We get about 12 billion dollars worth of income from agriculture in the state of Nebraska a year. To do these things we need sources of credit and financing. Land serves as a source of financing for these agricultural endeavors.
Click on the video below to see Roger Wilson talk more about agricultural land value increases in Nebraska.