BLOOMINGTON, Ill. — Farmland values in the Prairie State remained stable through 2019 despite extreme swings in the commodity market.
The findings were released March 19 in the Illinois Society of Professional Farm Managers and Rural Appraisers annual farmland values survey.
“Farmland remains a stable, safe investment in volatile times as we’ve seen so recently. Our survey data shows the farmland price trends in the state continues to exhibit a stable pattern with little deviation from a year ago,” said David Klein, First Mid Ag Service vice president and Illinois Farmland Values Survey and Conference chair.
Survey details were delivered via a webinar after the annual conference was canceled.
“In our year-end survey we capture the sentiment of what appraisers and farmland real estate brokers believe they are seeing,” Klein continued.
“Gary Schnitkey (University of Illinois agricultural economist, farm management specialist and ISPFMRA secretary-treasurer) polled their observations and outlook in our annual survey the second week of February.
“ISPFMRA and Realtors Land Institute members monitor the pulse of the Illinois farmland market every day and the information in our report suggests there is significant variation between certain local areas within each region right now.
“The general opinion of our membership’s survey showed characteristics of a market that remains stable.”
The statewide average for excellent quality farmland from Jan. 1-Dec. 31, 2019, was unchanged at $10,500 per acre. Good quality farmland sales averaged $8,600 per acre, down 1%.
The survey found the sales of average quality farmland from the beginning to the end of the year drop by 3% to $6,700 per acre. Fair farmland statewide averaged $5,200 per acre by year’s end, a 2% decline.
Excellent rated land has a productivity index of 133 and above; good rated land’s PI is 117 to 132; average, 100 to 116; and fair, less than 100.
The survey noted the general trend indicated a stable market at year-end for high quality farmland. The central belt of Illinois seems to have the most consistent position of a stable-to-slightly-higher farmland market.
Characteristics of farm sales in the data set for 2019 were slightly smaller in size and higher in quality compared to 2018. Challenges exist, especially in the northeastern part of the state and the lower quality soils in southern Illinois.
Settling estates was the top reason for selling farmland and estimated as the reason for the sale 58% of the time. This has been statistically the same for several years.
While estate sales are estimated to be 44% of the volume of farmland sold in 2019, active farmer selling was estimated at 10%, 7% higher than the 3% estimated in 2012 when farmland values were nearing their peak.
Farmers accounted for 59% of the farmland purchases made last year.
Around The State
Here are some of the survey findings by geographies.
Region 1 — Will, Kankakee, Kendall, Kane, DeKalb, Grundy, McHenry, LaSalle and Boone counties: Excellent quality farmland sales averaged $9,766 per acre, good sales averaged $8,023 per acre, average farmland was $6,334 per acre and fair at $4,821 per acre.
With current commodity prices and 2020 crop speculation, land values did not seem to reflect this less than ideal outlook. Over the entire Region 1, all land classes remained stable from the prior year with an average amount of land transactions.
The steady market comes in part from continued demand from investors and farmers. These buyers have ample opportunities as there is still a supply of farms being sold from estates or retiring farmers.
Demand for rural residential tracts between 5 and 15 acres has heightened over the last year, many from smaller farms that have been split into several lot sized tracts. These tracts are seeing values from $10,000 to $20,000 per acre.
Region 2 — Bureau, Carroll, Stephenson, Jo Daviess, Whiteside, Lee, Ogle, Winnebago, Bureau, Henry and Mercer counties: The farmland market in the region showed a slight decline for excellent tracts while good and average tracts indicated a slight increase.
Fair quality tracts showed stable to slightly declining in 2019. However, limited fair tract sales data makes it difficult to determine any definite changes in the market.
The median price per acre of all land classes was $8,977 in 2019 compared to $8,532 per acre in 2018. The number of sales in the region is steady when compared to 2018.
Overall, the farmland market in Region 2 was relatively quiet. There are still a lot of moving parts in the market and depending on which way they swing could have an impact on farmland values.
Region 3 — Stark, Peoria, Warren, Henderson, McDonough, Knox and Fulton counties: Excellent productivity land sales averaged $10,800 per acre, good land ranged from $8,000 to $8,500 per acre, average land sold in the $5,750 per acre range, fair farmland averaged $3,000 per acre and recreational lands $3,500 per acre.
There continues to be good demand for excellent quality farmland. The auction sales were well attended and active competition among bidders. With that being said, buyers are still very discerning with almost no blemish going unnoticed.
Region 4 — Livingston, Woodford, McLean, Tazewell, Mason, Marshall and Putnam counties: Excellent productivity tracts sold averaged $10,514 per acre, good was $8,586, average was $6,981 per acre and fair — only 3 tracts — at $7,240.
Sales seemed to be steady throughout the year instead of concentrated at the beginning and end of the year as typically seen. Though the overall average was steady, similar land saw a variety of prices when located in different areas. This led to seeing more sales at both ends of the range for the given land classification.
Location is the number one factor of a farm’s obtainable price. Furthermore, rectangular fields with no waterways or cut-outs and with good or excellent soil productivity saw premiums as compared to fields containing characteristics that would slow down today’s large, modern, equipment.
Region 5 — Champaign, Douglas, Coles, Edgar, Vermilion, Iroquois and Ford counties: Farmland values for excellent and good productivity were down 5.7% and 6%, respectively from the previous year, while average productivity land increased 15%.
Excellent productivity land sales ranged from $9,500 to $11,500 an acre, good was $7,000 to $9,000, average productivity was $5,000 to $7,000 and recreational was $3,500 to $4,500.
Total sales volume increased about 8% from 2018, although sales of cropland were 14 percent higher with fewer sales of other land types. Buyer attitudes are becoming increasingly cautious, leading to more selectivity in the quality and location of properties of interest to them.
Region 6 — Macon, Logan, DeWitt, Piatt, Moultrie, Shelby and Christian counties: Values for excellent and fair productivity farmland sales were up slightly from the previous year and down slightly for good and average land.
The per acre sales for excellent rated farmland averaged $10,835, good was at $8,839, average farmland was $6,705 and fair $5,995.
Overall, the market was steady for the first three quarters of the year, with a strong fourth quarter pushing values up for the year. There were a couple of large auctions with very strong results that gave the market strength.
The slight increase in the market is due to the continued demand from buyers for land in central Illinois. Buyers include farmers and investors in a market where supply remains tight.
Region 7 — Greene, Calhoun, Sangamon, Macoupin, Morgan, Scott, Montgomery, Cass and Jersey counties: Farmland values remained steady to up 2% to 4% in the region, but overall sales were down "quite heavily" during 2019 before picking up speed going into 2020.
The report notes excellent productivity tracts averaged $11,338 per acre, good land was $8,565 per acre, average farmland was $5,192 per acre and fair was at $5,406 on limited sales.
The lack of supply might have helped give certain types of lands the gains they saw.
Precise geography also continued to play a vital role in a farm’s value. Land located near well positioned neighbors in a strong ag area continues to bring a premium.
Not only are there unique geographic pockets of strength within the region, even the specific counties have areas that are especially competitive and strong.
Region 8 — Madison, Bond, St. Clair, Clinton, Washington, Monroe and Randolph counties: The region saw a broad range of prices across the board compared to the previous year. For example, excellent productivity land sales ranged from 17% lower to 6% higher.
Limited sales for excellent and good productivity farmland averaged $12,780 and $10,080 per acre, respectively. Most of the region is made up of average productivity soil types and those sales averaged $7,486 per acre. Fair land sales averaged $5,861 per acre.
Prior to 2008, tracts close to cities and rural subdivisions, or transitional tracts, were selling for 3 times the value of farmland. Most areas took very long to recover, and now those parcels are selling for above-farmland values again.
The population in the St. Louis metropolitan area provides a strong economic engine for the economy of the region and has a positive influence on land values depending on location.
Region 9 — Clark, Cumberland, Lawrence, Wabash, Edwards, Fayette, Effingham, Richland, Marion, Jasper, Crawford, Wayne and Clay counties: The overall trend for the farmland market in this region was steady year-over-year.
Typical per acre sales were noted as $8,350 for good productivity land, $7,000 for average, $4,800 for fair and $3,200 for recreational land. There were not sales of excellent productivity land in 2019.
The better quality land in this region has remained stable in overall value. The market is showing some signs of decline in the less desirable land qualities. Fair productivity land indicated a decline of almost 6%.
Region 10 — Gallatin, Hamilton, Massac, Pulaski, Saline, White, Alexander, Franklin, Jackson, Jefferson, Williamson, Union, Johnson, Hardin, Perry and Pope counties: Good productivity land value increased 2% from 2018 with typical sales around $7,550 per acre. Year-over-year average productivity farmland sales ranged from a 10% increase to 3% decline, ranging from $4,450 to $7,500 per acre.
Fair productivity land typically sold in the $3,500 per acre range, a 3% decline from the previous year and recreational land sales of $2,800 per acre were up 4%.
Good productivity farmland transfers which are few in the region indicated values were unchanged or slightly up. The volume and acreage transferred were down.
Weather risks, as well as lower commodity prices, may have resulted in decisions to delay sales. It is too soon to tell the impact of levee breaks and flooding on price of good and area 1 productivity tracts in the levee protected parts of Region 10.