Agricultural Economics Department
Date of this Version
7-1981
Document Type
Article
Abstract
Farmland values have steadily appreciated over the past four decades, but the largest advances have occurred since 1971. During the last ten years, Nebraska farmland values have increased nearly twice as fast as inflation.
However, the past year ending February 1, 1981, was an exception. Farmland in Nebraska appreciated about 10 percent, which was comparable to the overall rise in the General Price Level. So, in real terms (purchasing power), farmland values were essentially stable across the State during the last year.
Considerable variation in value trends across Nebraska was evident in the findings of the Department of Ag Economics fourth annual farm real estate market developments survey for 1980-81. The largest percentage gains were reported in the western portions of the State, while severe drought conditions contributed to the more moderate changes in the eastern areas.
These estimated average values reported obviously represent a wide range of land values, even within the same areas of the State. For virtually all types of farmland, it is not uncommon for high grade land to be valued more than 50 percent higher than low grade land. Consequently, these estimated values are very generalized, serving as benchmarks or indicators of changes rather than as proxies for values of specific farmland tracts in an area.
Market participation continues to be dominated by those buying land for expansion of present operations and/or investments to hedge against inflation. Thus, the buying side of the farmland market tends to remain sensitive to those economic conditions within the farm production sector. On the selling side, estate settlement and retirement sales constitute the bulk of market activity. Most farmland is locked into an existing operation with the owners having little or no intention of offering their land for sale. Thus, these characteristics tend to slow farmland value appreciation during periods of economic uncertainty and push values even higher during improved economic conditions.
Comments
Publication by the Department of Agricultural Economics, Report # 118, July, 1981. Website address is: http://www.agecon.unl.edu/realestate.html
The authors wish to express their appreciation to the survey reporters for their participation in completing and returning the Nebraska farm real estate market survey questionnaire. Without their efforts and interest, the availability and publication of the data within this report would not be possible. Special thanks is also extended to the Federal Land Bank of Omaha for providing the farmland sales data for Nebraska published in this report.