THE LAND MARKET AS WE SEE IT – A Sutton Synopsis of 2018
by Val Sutton
2018 resulted in another successful year in the auction and real estate profession for our firm, with a high volume of sales that were sold primarily at auction, although we also had a number of privately negotiated sales.
Questions continue to be presented to us about the strength of the land market and where we are in terms of values. Certainly the current land market is well off of the “Bubble in Values” experienced throughout portions of 2012 & 2013. It would appear that in 2018 land values have stabilized, as they have diminished enough to meet the resistance levels – that meaning that values have hit a level where prospective buyers that were previously on the sidelines throughout the peak periods in land values, have once again re-entered the marketplace and are seeing land as an attractive investment and perhaps a “safe haven” for funds as compared to other more risky investments.
In 2018 we did witness some market fluctuations – the first 6 months of the year showed excellent demand and strength in the market, with a number of farms selling in the $6,000.00 to $9,000.00 per acre range, with some noteworthy peak sales – inclusive of two farms in Pipestone County MN at $8,825.00 and $8,200.00 per acre; a farm in Lincoln Co., SD at $9,375.00/Acre; and 3 Moody County farms at $10,100.00, $11,050,00, $11,000.00; then subsequently progressing for a period of time lasting through the Summer and throughout September and October, it seemed the market softened and was a bit bouncy, this due primarily to a combination of items including – crop concerns as a result of some challenging weather conditions, government tariff concerns, softening of grain prices, unsettled discussions relating to the USDA farm program, concerns over increases of the prime rates by the Federal Reserve and resulting increases in long term interest rates by local lenders. After all of that, more normalcy and less unsettledness prevailed and more optimism became apparent in the marketplace as we progressed into Fall – in part due to another year of excellent crop production in many areas , a USDA supplemental Market Facilitation Payment (MFP) to offset tariff losses, an agreement on a new USDA farm bill and other positive factors, resulting in a somewhat rekindled enthusiasm in the market with some excellent results including – Moody County, SD sales at $6,550.00, $7,150,00 & $8,300.00 per acre; Lake County SD sales at $5,500.00, $5,950.00 & $8,550.00 per acre; Lincoln Co., SD sales at $5,000.00, $6,000.00, $6,150.00, $6,950.00 & $7,900.00 per acre; a Pipestone County MN farm with a mix of cropland/pasture at $6,600.00 per acre; and several Minnehaha County sales at $9,000.00, $9,100.00, $9,400.00, $12,600.00, $6,925.00, $9,900.00 & 10,000.00 per acre. Thus, in summary, it is our observation that we have observed a great deal of resiliency in the land market and at the close of 2018 it our prognosis that appears that the Land Market remains- Alive and Well!!
It appears that going forward a variety of influences will affect land values, including but not limited to – Interest Rates, Production, Commodity Prices, Tariff Restrictions on the Marketplace and Other Global Economic Influences, the Value of the US Dollar as compared to Other Currencies, and Other Extenuating Influences that are beyond our control, which may affect future land market conditions and will be key influences in order for the land market to remain firm and sustainable. In agriculture we all seem to face each coming year with a sense of optimism, with a positive outlook for prospects for sufficient to abundant production and a hope that we might find a climate for higher commodity prices, All Things Considered – We Believe There Are Prospects for Continued Strength in the Land Market in 2019.
At the close of 2018 we witnessed many land buyers remain “Sold on the Market” – especially those that had strong equity positions, as there remain many individuals that are anxious to invest in agricultural land as a safe haven for investment of their dollars. One key factor remains – That being that the economic theory of “Supply and Demand” remains in full force & effect, as it appears that there continues to be an unbalanced demand for high quality cropland, as there seems to remain a greater supply of qualified buyers in the marketplace, than there is land available for purchase. AS FOR 2019 – It is our opinion – that if there are no major adverse economic influences, if crop production remains average to above average and if commodity prices don’t erode further and should strengthen, then we do not foresee any evidence on the horizon for drastic downturns or increases in land values, hence it is our opinion that going forward, we expect land values in 2019 to remain constant and pretty status quo.
Our land sales in 2018 included some noteworthy results. Buyers appear to be a bit more discretionary, with highest demand for choice high percentage tillable land; marginal parcels of land that are more mediocre in quality have lower demand; pasture with quality grass, an abundant water supply and good fences is highly sought after, although poor quality grass without sufficient amenities such as water and/or decent fencing is less in demand and lower in value. We invite you to visit our website at www.suttonauction.com to see all of our 2018 sales and information pertaining to those sales, as well as an archive of land auction results for many previous years. Otherwise, we invite you to watch for our publication of our land auction results in the near future.
In summary, it’s still a GREAT TIME TO SELL! – As the Demand for High Quality Land & Pasture Outpaces Supply. As we begin 2019, it appears that the mindset of farm operators and investors alike in the market for land, is that they have a relatively high degree of optimism and remain competitive in their pursuit and acquisition of land. That said – the auction method of marketing in conjunction with our knowledge and professional experience creates a forum that exposes your property to the maximum number of qualified buyers, resulting in the true “Fair Market Value” for your property.
“Successful Auctions Don’t Just Happen They’re Planned” – The Sale of your property may be a once in a lifetime event, so it is important that you rely on an auctioneer with experience, knowledge, education, marketing & promotional skills, established contacts with numerous qualified prospective buyers and last but not least – a track record of success! Our auction company has been serving the auction needs of clients since 1932 and currently we are licensed RE Brokers in South Dakota, Minnesota, Iowa and Nebraska. Our firm has grown to be recognized as a leader in the auction industry. Furthermore, auctions have become the marketing method of choice for farmland, being the most tried and true method of marketing with a proven record of results surpassing such methods as sealed bids and negotiated sales, with auctions providing the “Ultimate Marketplace” – by maximizing the number of prospective buyers and also allows the seller to set the terms of sale and puts all buyers on an equal playing field, where all parties have a fair and equal opportunity to bid and buy. If you are considering the sale of your land, contact, Chuck Sutton and his staff at Chuck Sutton Auctioneer & Land Broker, LLC or any of our other affiliated offices, and let him and his professional associates put their years of experience to work for You!!
”Remember, Successful Auctions Don’t Just Happen, They’re Planned!!”
Sincere “Thanks” to all of you who have been and are responsible in so many ways for our ongoing success – from all of us at . . .
January 27, 2020
March 26, 2018
January 16, 2018