Agricultural Economics Department
Date of this Version
6-2000
Document Type
Article
Abstract
Nebraska's agricultural real estate market conditions have been monitored and analyzed annually since 1978 by the Department of Agricultural Economics-UNL. In the most recent survey for 2000, the markets for agricultural land were found to have remained relatively unchanged over the past year, despite generally poor farm commodity prices. As of February 1st, 2000, the UNL survey showed the state all-land average value to be $698 per acre, a 1.1 percent increase from 12 months earlier. While the values for particular classes of land across the sub-state areas moved in both directions, the percentage changes from year-earlier levels were generally modest.
For the cropland classes, reporters indicated that low crop commodity prices toned down local markets for cropland; however, there were clearly other countervailing forces at work- including the federal farm program payments which helped cash flow conditions considerably.
Returning profitability to the state's cattle economy by the last half of 1999 appears to have helped provide a somewhat stronger market for grazing land in the state, particularly across the major range areas. For the state as a whole, nontillable grazing land showed the largest percentage gain of all of the land classes-up five percent for the year ending February 1st , 2000.
In somewhat similar fashion, average reported cash rental rates for 2000 seemed to parallel previous-year levels rather closely. Even for cropland, reporters indicated rates for 2000 were generally similar to 1999 levels, as demand for land to rent remains robust. Tenants have not been negotiating lower rents-again a reflection of 'recent farm program transfers as well as the prevailing competition for rental land.
As for grazing land rental rates, the stronger cattle economy apparently influenced some modest upward movement of rates for the 2000 season.
Using detailed information reported for 480 agricultural real estate sales in Nebraska during
1999, specific market characteristics and trends could be identified. While active farmers continue to be the primary buyer group, the proportion of total transactions fell to 68 percent in 1999, a level that has gradually declined over the past decade. Concurrently, the proportion of purchases by local non-farmers and non-local buyers has steadily increased. Reporters from across the state observed this pattern of greater buying interest from, non-farmers, who have a variety of reasons for buying land. Regardless of buyer type, less than one in 10 purchases in 1999 were by first-time farmland buyers.
Specific sales activity of the past year also indicates a relatively strong financial position of the market participants-on the selling side of the market by the general absence of forced financial sales and on the buying side of the market, where essentially half of the purchases in 1999 were for cash with no debt financing involved.
Comments
Publication by Nebraska Cooperative Extension EC 00-809-S, June 2000. Website address is http://agecon.unl.edu/realestate.
The Authors express their appreciation to the survey reporters for their participation 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.