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Record ag land prices seen across Nebraska PDF Print E-mail
Written by Wauneta Breeze   
Thursday, 16 February 2012 22:32

Recent sale of irrigated ground in Chase County tops $5,000 an acre


By Tina Kitt

The Wauneta Breeze


Wauneta real estate agent Page Johnston remembers the precise day he and fellow real estate brokers realized they were witnessing a major turning point in area farmland values.

Several parcels of dryland farm ground located on Wauneta’s South Divide on the Chase-Dundy County line were up for auction at the Wauneta American Legion Hall as part of the Eleanor Blobaum estate sale, handled by Johnston and his associates that December day in 2009.

Some thought the ground might bring as much $1,000 an acre instead of the $600 to $800 commonly seen a year earlier, but once bids begin to fly the price quickly eclipsed the $1,000-mark on its way to over $1,300 an acre.

“It put us back on our heels for a moment,” recalls Johnston, owner of Johnston Real Estate in Wauneta.

For him, the Blobaum sale was the first local indication that an extremely aggressive farmland market was unfolding.

From January 2010 to January 2012, Johnston worked on the sales of 8,500 acres of farm ground. During those two years he has seen cropland more than double in value.

This past fall, for example, three 160-acre-parcels of dryland ground located south of Wauneta, not far from the Blobaum property, sold at private auction, with one parcel averaging $2,400 an acre, surpassing the Blobaum ground by $1,000 an acre two years later.

The Colson Agency of Imperial handled that sale, with Bob Colson noting that is the highest priced dryland ground he has sold in this region.


Irrigated prices

The jump in the prices commanded by irrigated ground across Nebraska is even more breathtaking.

In eastern Nebraska, irrigated land prices hit $10,400 an acre in December 2011 when a quarter section of pivot irrigated farmland located 3 miles south of York was bought at auction by a fifth-generation York County farm family. They paid slightly more than $1.66 million for the 160-acre parcel.

That record price was bettered by $1,600 an acre two months later. Last week a quarter section of gravity-irrigated land in Clay County brought $12,000 an acre. The sale comes just weeks after three Adams County pivot irrigated parcels sold for $11,700, $11,600 and $10,800 per acre, according to the Associated Press.

Randy Ruhter of Ruhter Auction which handled the Clay County sale told the Hastings Tribune he believes the $12,000 an acre paid for the Clay County land is the highest per-acre amount ever fetched for Nebraska farmland.

“If it’s not a record, it’s a near-record at public auction for the state. There may have been some private treaty things between two parties that may have sold in that range, but I don’t have anything documented above that,” said Ruhter.

Records, of course, are meant to be broken. Already this week there are unconfirmed reports of cropland near Lincoln bringing $20,000 an acre.

While land values in western Nebraska lag behind those of eastern Nebraska, with significantly less rainfall seen in an average year out west, recent land sales indicate the percentage rise is still as dramatic.

Last month, in mid-January 2012, a Chase County farm family was the high bidder on 480 acres of irrigated ground in northwest Chase County sold by Gary and Robert Schall of Illinois. The buyers paid an average of $5,000 an acre on the three parcels, a total of $2.41 million.

With prices broken out for irrigated land and dryland, the value of the irrigated ground figures closer to $6,000 an acre explained Johnston.

According to records on file at the Chase County Assessor’s Office, this sale is the top price for a non-private, “arm’s length sale” of farmland in Chase County.

To the north, in Perkins County, irrigated land belonging to the Rex and Phyllis Haberman family brought close to some of the top prices being garnered there, selling at auction in December 2011 at an average of $5,431 an acre on a 313 acre parcel. An irrigated quarter belonging to the Haberman family in southwest Chase County sold for $4,063, a new high for the county at that time.

Earlier in 2011, four parcels of primarily irrigated land totalling 792 acres located north of Lamar sold for prices ranging from $2938 to $3,178 an acre.

Mike Moreland of Moreland Realty in Imperial said he thinks it’s only a matter of time before Chase County sees its first $1 million quarter of irrigated land.

Recent sales of irrigated land have not necessarily involved sales of top quality land, noted Moreland. Instead, they have been primarily the result of settling estates or from management companies taking profits on their holdings.

“If a few top quarters with good water hit the market I would expect them to approach that $1 million-a-quarter threshold,” added Moreland.

According to information released by area real estate agents other area ag land sales in 2011 include land northeast of Palisade which brought $1,675 an acre for 103 acres of dryland cropland and $316 an acre for 57 acres of rangeland; and the sale of 256 acres of dryland cropland in Hayes County south of Grainton at $1,570 an acre.

While not all land sold this past year brought these heady prices, the trend is upward across the board. And there are few, if any, signs that trend will end soon.

“We’ve had good yields and high prices combined with low interest rates. People need a place to park their money and they’re in the market to buy land,” said Colson, noting that it’s a seller’s market all the way with very few people interested in selling their ground.

“The days of $2,500 an acre irrigated land are long past in the rearview mirror,” said Johnston.

This run-up in prices will impact all agricultural land owners as tax valuations, and taxes, move higher in tandem.

“Last year we saw a big hit on dryland valuations,” noted Chase County Assessor Dotty Bartels, adding that irrigated land valuations are in line for the next hit. Grassland values have not experienced the dramatic increase in value seen in cropland, added Bartels.

The rolling three-year average of property valuations used in Bartel’s office shows irrigated land valued in a range between $1,360 and $1,500 an acre for tax purposes in 2012. Dryland crop ground is valued between $600 and $700 an acre. Grassland is valued at $300 an acre for tax purposes.

UNL land price survey

Agricultural economists at the University of Nebraska released preliminary results of their annual survey of land values this fall.

Initial data shows the average price of farmland rose by 22 percent statewide over the last year and has doubled in the last six years.

All categories of land saw gains, but crop ground led the charge.

“That’s a clear reflection of high income conditions for the state’s crop sector over the past few years,” said UNL ag economist Dr. Bruce Johnson, who leads the survey.

“2011 is a very unique time in the agricultural land markets,” Dr. Johnson added. “It’s a thin market with robust demand and very little land available to buy. It is making for interesting times, that’s for sure.”

Final numbers for UNL’s 2011 report are expected to be released by the end of March.


Increases escalating

The rate of increase over the last 12 months is what is catching many by surprise said Lee Vermeer, vice president of real estate operations at Farmers National Company.

“Values are up 20 to 25 percent this past year, compared to rises of 5 to 10 percent in 2010,” notes Vermeer.

“Farmers make up 75 percent of the buyers in the market, despite continued strong interest from investors,” said Vermeer in a FNC press release distributed last week. “Land continues to be a tangible investment that has performed well, thus the demand.”

While most project brisk land sales activity to continue, there are market factors that could impact the future of farm values.

“Overall the upcoming year looks positive,” said Vermeer. “However, poor performance in the commodity market over the next year could bring downward pressure on land values. Good weather world-wide could result in a crop surplus, dropping prices. In addition, inflation would boost interest rates, negatively affecting land values.”

Colson said conditions are good for the foreseeable future, but doesn’t expect the land price boom to last forever, recalling how land prices dropped by half and interest rates rocketed to 18 percent after a similar run-up in land prices in the 1970s and 1980s.

“History seems to want to repeat itself,” noted Colson.

Last Updated on Thursday, 16 February 2012 22:34