Agricultural Economics Department
Date of this Version
6-1998
Abstract
Nebraska's 47 million acres of agricultural real estate is currently valued at nearly $35 billion, averaging more than $700 per acre. Only four other states have a higher-valued farm real estate base.
The value of agricultural land in Nebraska rose an average of 8.6 percent during the year ending February 1, 1998. Based upon the annual UNL Farm Real Estate Market Survey series, this represented the 11th consecutive year of value increases for the state's all-land average.
The three districts which comprise the eastern third of the state experienced the largest percentage gains in all land values, approaching 10 percent for the year. Dryland cropland in these districts showed strong gains as did center pivot irrigated cropland. For the remainder of the state, the market advances were much more variable across land types.
The average 1998 values represent historic highs for several of the land types across the state. Center pivot irrigated cropland is currently at historic highs in all but the Northwest District. The classes of dryland cropland are also at historic highs in several of the districts.
Several factors are contributing to upward value movements, the most notable being the. financial strength of current owners and demand for expansion purposes. Favorable mortgage interest rates and general economic conditions were perceived by 1998 survey reporters as also being strong influences on upward-moving values.
The demand side of the market continues to be predominantly active farmer buyers, but 1997 sales activity did show some gradual increase in the presence of non-farm buyers.
Cash rental rates·for 1998 were mixed. Dryland cropland rates moved upward in 1998 in six of the eight districts and remained stable in the other two. Rates for irrigated land were basically similar to year-earlier levels throughout most of the state, as were pasture rental rates.
Net annual returns to land as a percent of current value were reportedly down somewhat as of early
1998. Reporters throughout the state observed some decline for all types of agricultural land. This reflects the recent gains in land values that have not been matched by similar gains in net income flows.
Survey reporters at the beginning of the year generally expected market activity in 1998 to be similar to 1997levels. Two-thirds expected similar levels, while nearly one-third looked for some increase. Three out offive reporters expected land values to climb in 1998 - an average of 6 percent. The bulk of the others saw stable land values in 1998, while only a very small percentage looked for value declines.
Comments
Published by the Department of Agricultural Economics, Report # EC98-809 S, June 1998.
The author expresses sincere appreciation to the survey reporters for their participation in the annual UNL Nebraska Farm Real Estate Market Survey. Without their input, much of the information within this report would not exist.