Date of this Version
Agricultural land values rose 4 percent during 1990, although the pattern varied widely across the state. The annual increase represented the fourth straight year of increase according to the University of Nebraska annual Farm Real Estate Market Survey series; yet the 1991 average value remained at about two-thirds of the peak value recorded 10 years earlier.
Largest percentage gains in value were reported in the Central Crop Reporting District where the all-land average rose 10 percent. In contrast, the Southeast District recorded a slight decline in the all-land average.
By type of land, grazing land values usually showed the largest percentage gains during 1990 as profitability remained in the cattle sector. This, together with other factors, point to a current market environment in which incremental value adjustments are being made in response to perceived changes in rents and returns. In short, the agricultural land market appears to be rather deliberately seeking out sustainable levels of value with respect to earnings potential.
On the demand side of the market, expansion of operation continues to be seen as the primary motive for purchase. About four out of every five purchases were made by active farmers in 1990. Investment opportunity was mentioned with some frequency as a factor on the demand side as well.
on the basis of 475 transactions during 1990, it appears that a high percentage (42 percent) were cash purchases where no debt was incurred. About half of the transactions involved mortgage financing.
Average 1991 cash rental rates reported for dryland cropland were generally similar to year-earlier levels. However, a notable decline was observed in Southwest Nebraska. For irrigated cropland, 1991 rates were higher than year-earlier levels frequently by 5 to 10 percent. Rates of $110 to $125 per acre were typical in the major irrigation areas, with rates of $135 or more quoted at the high end.
However, most pronounced changes in 1991 rental rates were for pasture land. On a AUM (animal-unit-month) basis, average rates were at or approaching $20 in most of the major range areas -- up 15 percent or more from 1990 levels. The 1991 AUM rates are substantially above previous historic highs in every district.
Rates of return to agricultural land and estimated each year by survey reporters. This represents the average net percentage rate of return that land owners could expect at present real estate values. Estimates for 1991 were generally somewhat lower from year-earlier levels for irrigated and dryland cropland while higher for grazing land. Moreover, the previous disparity in rates of return across the three land classes appears to have narrowed. Returns of five to six percent were common.