Farmland values rising more slowly – U.S. farmland values in 1990/91, according to a July survey of rural real estate appraisers

Farmland values rising more slowly – U.S. farmland values in 1990/91, according to a July survey of rural real estate appraisers – U.S. Dept. of Agriculture, Economic Research Service report

Roger Hexem

A national panel of 450 rural real estate appraisers surveyed in July expects U.S. farmland values to rise 0.9 percent during the next 12 months. The appraisers also reported a 2.9-percent increase in farmland values during the previous 12 months. Appraisers cite weakness in the economy and lower commodity prices as key reasons for the slower expected rise in farmland values.

In July 1990, 64 percent of the appraisers forecasted higher values for the next 12 months, while only 3 percent expected declines. They looked for higher commodity prices, increased demand by producers expanding operations, and higher inflation to help support a gain of 3.2 percent in farmland values during July 1990-91. But in July 1991, only 39 percent of the appraisers expected higher farmland values in the year ahead, and 15 percent anticipated declines.

Biggest Gain Expected in

West, N. Central Regions

Just over half the appraisers from the West expect higher farmland values in that region in the year ahead, while 40 percent anticipate no change. Overall, farmland values there are expected to rise 1.9 percent between July 1991 and July 1992. Appraisers cited stronger investor demand, higher commodity prices, and an improved economy as principal factors supporting the expected increase.

About three-fourths of the appraisers in the West reported rising farmland values during the past year. They attributed this 3.2-percent gain in values largely to increased investor demand for farmland, producers expanding their operations, and higher commodity prices.

In the North Central region, a third of the appraisers expect higher values over the next 12 months, down from 73 percent a year ago, while 57 percent currently anticipate no change. The 1.7-percent increase expected for the year ahead is less than half the 4.2-percent rise reported for the preceding year.

Those expecting higher values in the upcoming year look for increased demand for farmland, favorable weather, and higher commodity prices. Reported value gains during the past year largely stem from higher commodity prices and stronger demand for farmland from producers expanding operations.

Values Up in Northeast,

Down in the South

Appraisers in the Northeast anticipate a 0.5-percent increase in values over the next 12 months, about half the 1.1-percent gain expected in April 1991 for the 12 months following that survey. The July year-ahead increase is contingent on higher commodity prices, while the April prediction hinged on expectations of both higher commodity prices and stronger investor demand.

Eighty-six percent of appraisers in the Northeast indicated unchanged values during the year past, although 11 percent reported higher values. Overall, appraisers in the Northeast reported a gain of 0.4 percent since July 1990. Those reporting higher values cited improved farm incomes and stronger demand for farmland.

Appraisers in the South anticipate a 1.1-percent drop in farmland values in the year ahead. They were about equally divided on whether values would be higher, lower, or unchanged. A weaker economy and lower commodity prices contributed to the appraisers’ forecast drop in farmland values.

Nearly half the surveyed appraisers in the South reported higher values during the past year, while 40 percent indicated no change. They attributed the 1.2-percent gain to higher commodity prices, a stronger economy, and increased investor demand for farmland.

Quarterly Forecast

Shows Some Strength

After reporting a slight decline in first-quarter 1991 farmland values, appraisers indicated a 0.2-percent increase in second-quarter values and an expected 0.3-percent gain in the third.

Quarterly changes vary regionally. While the West exhibits consistent 1991 gains, the North Central region shows the strongest second- and third-quarter increases, at 0.4 to 0.5 percent. Changes in the South are mixed, and appraisers in the Northeast indicate no change since first-quarter 1991.

About the Survey

A panel of about 450 rural appraisers, all members of the American society of Farm Managers and Rural Appraisers, participates in quarterly surveys of farmland values. Their opinions on farmland values complements the Economic Research Service’s annual surveys of farmland values.

Appraisers focus on value changes during the past 3- and 12-month periods and on expected changes over the next 3- and 12-month intervals. In determining regional averages, appraisers weighted individual responses according to the acres of land in farms within each reported area. Similarly, the regional averages are weighted by acres of land in farms to develop national weighted averages.

The Wisconsin Survey Research Laboratory at the University of Wisconsin conducts the surveys for the Economic Research Service.

COPYRIGHT 1991 U.S. Department of Agriculture

COPYRIGHT 2004 Gale Group