Farmland Values Stable in Weak Economy

According to the Kansas City’s Fed’s quarterly Survey of Agriculture Credit Conditions, farm real estate markets remained relatively stable in the fourth quarter of 2017.  Values for all types of farmland across the upper mid-west and Rocky Mountains declined only 3% from a year ago.  Prior to the fourth quarter, farmland values had declined at an annual pace of 5%-7%, but those declines appear to have slowed more recently.

The KC Fed says stability in farmland values was due, in part, to fewer sales.  For the fifth straight year, a majority of bankers reported a decline in the volume of farmland sold.  Looking ahead, a significant number of bankers expect values to remain steady in 2018.

The report says fewer bankers expect farm income to decline in coming months, suggesting that economic conditions may continue to stabilize. Still, ongoing demand for financing amid a low income environment and slightly higher interest rates suggests that credit risks in the farm sector will remain a focus for 2018.

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