Spring numbers show sharp increase in Illinois farmland prices
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[October 15, 2021]
By Zeta Cross
(The Center Square) – In the first half of
2021, analysts say Illinois farmland prices did something atypical: they
shot up in value.
A survey of members of the Illinois Society of Professional Farm
Managers and Rural Appraisers (ISPFMRA) done in August showed a 20%
increase in the price of Illinois farmland in the first half of 2021.
This is only the fourth time in the past 50 years that farmland prices
have increased so significantly.
“Right now all of the elements of buying farmland simply look better
than they used to. But they have always looked good,” said Mike Doherty,
senior economist and policy analyst of the Illinois Farm Bureau.
Because of historically low interest rates, Doherty said property all
across the country has gone up in value.
“It’s not just farmland. All land, all property, is going up,” Doherty
said. “This is an unusually rapid increase in farmland prices that
mimics, or is in line with unusually rapid increases in property values
across the U.S.”
Signs of inflation kicking in is another reason that investors are
pushing the price of farmland up, Doherty said.
“Inflation has always been the friend of farmland prices,” he said.
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As an investment class, farmland is considered very
steady….with a steady trajectory. It doesn’t go up and down rapidly
in value – compared to other assets.
“People are interested in buying farmland because
they are afraid that inflation could reduce the value of holding
money in other forms,” Doherty said.
ISPFMRA will break down the numbers and present a deeper dive into
the data on farm prices at their annual meeting next March.
“We want to see if this is sustained and what kind of land classes
we are talking about,” Doherty said.
This summer the Chicago Federal Reserve Bank, which surveys 150
rural bankers, reported a price increase in the value of northern
Illinois grain-producing farmland, Doherty said.
“In the second quarter, their survey showed that farmland in that
very strong agricultural area of Illinois increased by 14%
year-over-year,” he said. “I’ll be looking for future Chicago
Federal Reserve Bank Reports to see what they say.”