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As mortgage rates climb to 20-year highs, near 8%, current high-interest rates are eating away at the housing market. This year is currently on pace to see the fewest home sales since 2008. However, farmland sales aren't witnessing the same sticker shock. In North Dakota, Pifer's Auctioneers says it just set a new land sale record in the state.
According to a post on Facebook, on November 1, Pifer's Auctioneers hosted a live and online land auction. The farm featured 320 acres of highly-productive land in Pembina County, North Dakota. That's the very northeastern corner of the state in the Red River Valley. The auction house says the land sold for $17,500 per deeded acre to a family farm operation, which shattered the all-time high for North Dakota cropland. Roughly 30 bidders were on hand for the auction.
The Pifer team says that area is known to be tight where very few farms ever get exposed to the market. Another of the enticements comes from the crop rotations in that region. Farms typically grow potatoes, sugar beets, wheat, corn, barley and soybeans. The ability to produce sugar beets and potatoes on medium to heavier loam soil, without irrigation, was a strong draw.
At $5.6 million, or $2.8 million per quarter, it breaks down to:
Parcel 1: $18,571 per FSA cropland acre
Parcel 2: $18,393 per FSA cropland acre
The USDA’s Farm Service Agency (FSA) specifies acreage that qualifies for their agricultural programs.
Jim Rothermich, Vice President of Iowa Appraisal, calls this a bell ringer for the state of North Dakota. Looking at Iowa, he says land market conditions remain steady and strong. "Since peaking around May 2022, the market has declined a small percentage and is now pretty much in equilibrium, or flat," Rothermich explains.
“While rising interest rates and higher input costs may tap the brakes on large land price increases, I think market conditions will be stable for the next six months to a year," Rothermich says. “When comparing 2023 to the hot markets of 2022, it's clear land values have cooled off slightly in Iowa.”
EDITOR’S TAKE:
Although no one can predict the future with certainty, one can look at recent sales to get a feel for land values. If the North Dakota sale is any indication, things haven’t really slowed down for high quality land. The outlook for 2024 may not appear as bright as 2022 or 2023, but we don’t see large declines on the horizon. That means the balance sheets of farmers/ranchers will remain strong, thus, making them extremely good credit risks. Farmers/ranchers should remain at the top of your customer prospect list. And be on the lookout for further announcements regarding CADFI – our exclusive and flexible truck financing option that will be available soon!
