2015 High Point Land Report
Farmland Prices in the 2015 calendar year showed market volatility to say the least. In South East Minnesota we saw a 5% drop in High quality values, 14% drop in medium quality, and 18% drop in low quality. In North East Iowa we saw a 3% drop in high quality, 5% drop in Medium quality, and 12% drop in low quality.
Buyers of Farmland from our data in 2015 were as follows:
• 77% Farmers/Operators
• 23% Investors (8% of which were absentee to the purchasing state)
• 31% of buyers or sellers exercised section 1031 Exchange opportunities
Purchase Motivations varied from portfolio diversification with the volatility of the world economy, continued low interest rates or other investment rates, scarcity of available farmland in the immediate area, and lower buyer competition allowing for a purchase discount from the past two years of higher prices.
Sellers of farmland were from 3 distinct categories. Estates looking to settle, split between heirs, or diversify partially into other 1031 exchangeable real estate with a higher return and depreciation options. Partnerships with assets in other categories looking to still show a capital gain on the farmland and help cover a loss somewhere else. Sellers with a better opportunity elsewhere, with property taxes increasing substantially in the last 3 years on farmland and rental rates decreasing with low commodity prices the landowners are getting squeezed down to smaller margins. This has motivated sellers to exchange into other real estate investment options tax-free or tax reduced while still selling at a gain before the market corrects fully.
Sales Methods have included Live Private Auction, Sealed Bid, Negotiated off market, and Traditionally listed. We offer a different option based on each farm and each clients needs. The highest prices were achieved at live private auction with local investors and neighbors competitively bidding, especially for desirable tracts with good access, soils, and drainage systems.
Hunting and Recreational Land values saw a slight overall 4% increase as we have seen the local non-farm economies rebound and rural home building also increase. We have seen prices on low quality/pasture land from $1500-$2500/ acre. More desirable parcels in good management areas with property access, available water, buildable sites, and a picture or two of a big buck sell in the $3000-$3500/ acre range.
We hope you will find our annual High Point Land Report beneficial to you or your business. If you have any questions on the provided information or on an individual tract please feel free to contact our office at 507-218-1243 or email us at sold@highpointauctioncompany.com
www.HPRAA.com
520 Main Street South Stewartville, MN 55976 – 507-218-1243