Farmland prices not values

[Brad S]

$17,000/acre in IowA Friday, April 15, auction in Sioux Co., Iowa, saw 80 acres of prime ground sell for $17,100 an acre. The farm was located about three miles north of Orange City and was virutally all tillable. It carried a CSR2 on the cropland of 90.9 versus the county average cropland CSR2 of 85.5.

Handling the auction was Mark Zomer, Vande Vegte & Zomer Realty & Auction Inc., Rock Valley, Iowa, 712-476-9443.

 

[4Diamond]

Farmer or investment group buy it?

 

[George]

Even if it is a farmer they have to be thinking the town will expand and increase the price more.

 

[mrj]

Whichever is the buyer, they either banked lots of money when corn prices were so high, and realize that with government actions taking away lowest cost fuels, corn prices for ethanol production are going to go up again.....OR if a farmer, maybe it was close enough to his place to be an asset and he can pay for it. It seems doubtful lenders would be very eager to loan far over true market values, doesn't it? Tho, with the proximity to the city and possible expansion...........stranger things have happened. Some day before long, food production might over take city expansion in value, if common sense means anything.

mrj

 

[Mike]

Monsanto is financing a lot of these farms. Especially where seed corn is grown and it's labor intensity is covered.

 

[rancherfred]

Even if it is a farmer they have to be thinking the town will expand and increase the price more.

Not these farmers and not in this area. My wife has family in this area and north of there up into Minnesota. Much of these purchases are local farmers and are not necessarily borrowing money to buy land. There has been very little correction in land prices as of yet throughout that region. I don't understand it myself, but I don't think this can go on forever. That land price doesn't set a record for the area.

 

[Brad S]

I think Fred is right - in this situation an 80 in between some very good farmers. What's it worth to accommodate the next generation? Almost priceless.

I just read land prices are expected to decrease 6 - 7% this year.

4diamond brought up investment group. Not in this situation, but many places these investment groups are making the market. While I think land is over bought, these investment groups don't agree.

 

[Brad S]

Poetry to my ears:

Mrj: "Some day before long, food production might over take city expansion in value, if common sense means anything."

 

[Cowpuncher]

Price may seem high, but the real point is that money is becoming more worthless with each passing day.

CP