Farmland prices steady after bullish run

BLOOMINGTON, Ill. — After a run where farmland sale prices over a three-year period increased by double-digit percentages across the board, prices steadied a bit in 2023.

The Illinois Society of Professional Farm Managers and Rural Appraisers rolled out its 29th annual Farmland Values and Lease Trends Report on March 21 at the Farmland Values Conference.

Luke Worrell of Worrell Land Services, Jacksonville, gave highlights of the comprehensive report.

Illinois is divided into 10 regions for report purposes, and the soil in each sale is identified by its productivity index, ranging from 133 to 147 P/I for excellent to less than 100 P/I for fair. Recreational and transitional tracts are also included in the report.

“This covers all of the sales we analyzed in the calendar year of 2023. This is data from over 70 professionals from throughout the state. It isn’t one person’s opinion or some small committee’s opinion of land values,” Worrell said.

“There’s a ton of work that goes into this on the regional level, on the committee level, and it filters up to this big book. A lot of people played a role in this publication. They’re all sharing real-world experiences.”

Statewide sales of farmland rated excellent averaged $16,906, up 5.48% from 2022 and 14.72% from 2020.

The statewide average for good farmland, 117 to 132 P/I, was $12,726 per acre, a 6.96% increase from the previous year and 13.67% above 2020.

The survey found statewide sales for average farmland, 100 to 116 P/I, averaged $9,544 per acre, a 13.26% jump from 2022 and 13.34% above 2020.

Farmland rated fair, under 100 P/I, averaged $7,478 per acre, 14.42% above 2022 and an 11.14% increase over 2020.

“I thought it was really interesting to see that even Class C (or average) and Class D (or fair) made up a little bit of ground, at least on the statewide level. Those were up 13.26% and 14.42%, year-over-year, respectively, and recreational was up 7%. This may not be what we expected when we met last year, but this is how the data came back on the average of all sales,” Worrell said.

“The median value of sales was very similar. All categories were up with huge numbers across the last three years. It was pretty remarkable.

“The gap between Class A values and Class B values is probably as wide as it’s ever been. Certainly, I think Class A is always going to kind of carry the flag, but the gap is bigger than it was during the last run-up.”

Transaction Trends

Worrell noted changes in number of transactions, depending on geography.

“For much of 2021 and 2022, the land industry moved at a breakneck pace in auctions and private transactions. We were spoiled in a sense in that there seemed to be a Class A land auction on a weekly basis. That changed dramatically in 2023,” he said.

“The velocity of closed transactions slowed considerably. Values largely maintained themselves or slightly increased, but the number of sales happening throughout the state appear to have been down considerably from the prior year.”

“Region 7 sales (in Sangamon, Morgan, Macoupin, Cass, Greene, Jersey, Scott, Menard, Calhoun, Montgomery counties) were down. We saw less turnover in Class A land in Regions 4, 5, 8 (in the McLean County region, Champaign County region and Saint Clair County region, respectively).

“If you look at the middle belt in Illinois, those are the regions where you see some of those really high dollar sales. Some of the strongest values in Illinois are through the Regions 3, 7, 6, 5 window.

“For example, Region 5 land sales were down 20% in 2023 and 8% in 2022. The number of land sales in Region 7 were down 30% in all classifications. Sales of Class A farmland in Region 8 was down 32%.

“So, we’re seeing values continue to go up, but we’re seeing a lot fewer sales.”

Tidbits

This marked the fourth consecutive year that showed average increases in land values across all classifications.

Last year’s report only had three of the 60 subcategories that showed steady to a decrease in farmland values. This year’s report has 12 subcategories that indicated “steady to a decrease.”

As a perspective, excellent farmland 20 years ago averaged $4,133 per acre, good was at $3,287, average sold at $2,286 and recreational land averaged $1,610 per acre statewide.