Since 2003, productive farmland in the Midwest has more than doubled in value. The first half of 2008, land prices again increased on the continued strength of commodity prices. Increases of 10-20% were seen in the spring, with a second increase of 10- 15% in the late summer/early fall time frame.
In October, 2008, the overall U.S. and world economy changed, affecting a wide range of investment instruments. This economic situation also caused a down turn in overall commodity prices. After a peak in farmland values in late summer 2008, we saw a quick price reduction of 5-10% in the NovemberDecember time frame. This down turn can be attributed to the uncertainty of the overall US economy and prospects for the future.
Sales in early 2009 indicate a reversal of the declines of November and December with an increase of 5% from the beginning of the year. There appears to be strong interest in farmland due to the perceived lack of other quality investments. Farmland has followed inflation in the past and investors appear to perceive it to be a good inflation hedge for the future.
The overall result is that farmland over the past twelve months has remained steady, although there have been some swings in valuation in that time frame. Only time will tell for sure, but it appears that farmland will continue to be a steady and secure investment into the future. Please feel free to contact us regarding the purchase or sale of farmland.