Farmland values in Renville and Kandiyohi County are March-ing upward!

I know we're into April now, but I read an article last month about how farmland values are still March-ing upward, though the market seems to be slowing down.

In an excellent article in the West Central Tribune by Tom Cherveny, he details the significant rise in farmland values over time in our region, including Kandiyohi, Renville, Yellow Medicine, Chippewa, Swift, and Lac qui Parle counties.

The full article is here: http://www.wctrib.com/content/farmland-values-continue-upward-some-signs-cooling-market

Farmland values continue upward but some signs of cooling market

By Tom Cherveny

 

"The value of tillable farmland continues to rise in the region, although some county assessors are seeing signs suggesting that the market may be ready to cool down.

 

Recently distributed property tax notices have already informed most landowners that values are up once again, continuing a trend that took off in earnest in 2008. The assessed value for 2014 on tillable land rose by approximately 10 percent or more in most area counties, including Renville County, which typically sets the pace.

 

Renville County saw its largest increase in 2013, when the per-acre value of tillable land ranged from $4,822 to $10,014, according to information from County Assessor Barb Trochlil. The 2014 assessment range is $5,140 to $14,190 per acre. There were 67 sales evaluated, indicative of a strong market. The assessments are based on sales from October 2012 to Sept. 30, 2013.

 

Other counties in the area have yet to crack the $10,000-per-acre mark, but they are coming close. Assessor Val Skor, Kandiyohi County, reported that the county’s 2014 tillable land values range from $3,354 to just over $9,000 an acre.

 

Land values to the west are not as high. It is also where some of the first indications of a possible change in the ag market are coming, according to Connie Erickson, Yellow Medicine County assessor. She spoke recently about the changes at a program with former state demographer Tom Gillaspy.

 

Erickson pointed out that since October, her office has seen several land auctions where no sales occurred because the sellers were not offered the prices they anticipated. She also noted that agricultural land values rose by 255 percent in the last six years, including a 36 percent jump in 2013. This last year’s increase was only 10 percent.

 

Assessor Bonnie Crosby, of Chippewa County, said sales records also seem to suggest that values are not rising as rapidly as in prior years. Nonetheless, other counties continue to see steady and relatively large increases. In Lac qui Parle County, land values rose 20 percent in the latest assessment, with a range for 2014 of $4,131 to $7,489, according to Assessor Lori Schwendemann.

 

Swift County is seeing steady jumps as well. From 2013 to 2014, the average for tillable acres rose from $4,420 to $5,730 per acre, reported Wayne Knutson, county assessor. Swift County saw 39 sales for 5,378 acres in the time period evaluated for 2013 assessments. In the period for the current 2014 assessments, it saw 29 sales for 2,540 acres.

 

Swift County has seen more activity than would be expected due to the Minnesota Farm Company. It owns several thousand acres in the western part of the county, and has been marketing the properties. The company’s land sales have greatly complicated the task of assessing values in the county. Knutson said there have been surprising variations in the prices at which land sold in recent sales.

No matter the variations in values per acre, all of the counties in the area have seen major increases in farmland values since 2008, while residential and commercial/industrial property values have remained largely unchanged.

 

The result is a major increase in the tax capacity of the counties, along with a shift of the overall burden to agriculture. Erickson reported that in Yellow Medicine County, the tax base has risen from $1.4 billion to $3.2 billion, with agriculture representing $2.8 billion of the total. Swift County added nearly $500 million in value last year alone due to the rising value of farmland, noted Knutson."

 

If you have any questions about selling your farmland, please contact me at 320-894-7528 or noah@farmlandman.com. I would be happy to help you out!

 

Sincerely,

 

Noah Hultgren

noah@farmlandman.com

320-894-7528

Sell your farmland before taxes go up?

I hope you all had a safe and happy Thanksgiving! There are so many things to be thankful for!

As we now approach the Christmas season and the end of the year, the pressure is on to sell farmland before tax rates go up. I read an interesting article in the Des Moines Register about the opportunities for selling farmland in the current environment. It was written by Dan Piller, and is included here:

Pressure's on to sell farmland before end of the year
Written by Dan Piller
Des Moines Register


DENVER, IA. — The clean, placid appearance of post-harvest Iowa farmland appears to be far removed from the messy fog of Congressional politics and the fiscal cliff.

But pressure is intense to sell land before Jan. 1 when, if Congress doesn’t intervene, capital gains taxes will rise from 15 percent to 23.8 percent and deductions on estate taxes will drop from $5 million to $1 million.

“If there is a chance that you may want to sell your farm, then you should think hard about getting it done before the end of 2012,” said Des Moines lawyer Bill Hannigan of the Davis Brown firm. On the front lines of Iowa’s farmland boom, farmers and landowners are filing into small-town meeting halls for auctions with one eye on the tax debate in Washington.

“The tax changes are on everybody’s minds. We have a sale every day, except Sundays, between now and Thankgiving,” regional sales manager Sam Kain of Farmers National Co. said before selling 169 acres of Bremer County farmland from the estate of Alvin and Maxine Walther on the day before the election.

“I’ve been in this business for 30 years and I’ve never seen it this busy,” Kain said.

The extra inventory of land sales hasn’t cooled off Iowa’s hyperheated farmland boom. In October the state set a record price of $21,900 per acre in Sioux County.

When the auction began at Denver, auctioneer Jeff “The Dirt Doctor” Obrecht reminded the gathering: “Land like this comes along just once every 50 years.”

Obrecht didn’t really need to entice bidders further. The Walther land bore a Corn Suitability Rating of 87, which attracts farmers to an auction like the opening of a Tom Hanks movie at the multiplex. So it wasn’t much of a surprise that the winning bid of $15,700 per acre from neighboring farmer Ken Eggena came after just 30 minutes of auction, with a break included.

Duane Walther, one of six children who watched the sale of the family land, reflected wistfully after the sales concluded. “Dad bought the first parcel of land for $100 per acre in 1946,” Walther said. “Mom died earlier this year and we are settling the estate. I just think of dad up there and he must be amazed at the price of the land.”

A week earlier a similar farmland sale played out at Gilbertville, south of Waterloo, where a 102-acre farm sold for $15,600 per acre. The sale was triggered by the death of Maxine Even, who had survived her husband, Cletus. The land was in the Evens’ estate and none of the 13 surviving children could afford today’s land prices.

“Some of the siblings are happy and some, who wanted to keep the land in the family, aren’t,” said a son, Gene Even, who lives on an acreage near the farm. Cletus and Maxine Even had paid $31,740 for the 102 acres on March 1, 1965. Almost a half-century later neighboring farmer Ben Riensche made a successful $1.6 million bid at auction for the same ground.

The drought last summer apparently added more fuel to Iowa’s farmland boom, especially when Iowa’s fall harvest yields were better than feared. During a break at the Gilbertville sale, auctioneer Troy Louwagie of the Hertz Farm Management Co. said: “When the drought hit last summer, who would have believed that land prices would stay this high?”

“But most farmers ended up with yields better than expected, which just reinforced the idea of how valuable Iowa farmland can be.” So strong is the demand for Iowa farmland that even the less desirable, sandy land is going for top prices.

A 136-acre parcel near Madrid owned by the James and Beulah Duling estate sold for $6,200 per acre. That’s hardly the stuff of headlines in an era of $15,000-and-up prices, but it’s well above the state average of $5,064 per acre as recently as 2010.

Son Carl Duling, a retired teacher in Madrid, was satisfied with the sale. “Dad paid $124 an acre in 1961,” Duling said. “The land is sandy. Not top quality, but it brought a good price. We’ll use the money to pay for mom’s nursing home expenses.”

The high prices paid for Iowa farmland inevitably conjure up memories of the extended Great Depression in agriculture during the 1920s and ’30s and the farm crisis of the 1980s. As rural prophets warn constantly, both of those calamities were preceded by the same kind of commodity and land price boom that Iowa has enjoyed since the middle of the last decade. But others point out that this time is different, in part because corn prices are above $7 per bushel and expected to stay there, if the U.S. Department of Agriculture forecast is to be believed.

“The price of corn is high and interest rates low and there is a shortage of alternative investment,” Kain said. Lenders who were overextended three decades ago have battened down the hatches this time. Farm Credit Services of America has imposed a cap of $5,200 per acre on farmland loans, which would have leveraged loans on the Walther and Even sales at 33 percent.

“Back in the 1980s, you saw lending going 80 percent or more of the value of the loan,” said Brian Thielges of Iowa Farm Finance Corp. of Des Moines, who originates and packages farm loans for Federal Agricultural Mortgage Corp., or Farmer Mac. “Today, you seldom see loans going more than 60 percent or more of the value, and many are less,” Thielges said.

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If you are interested in selling your farmland soon, please contact me at 320-894-7528 or noah@farmlandman.com and I can help you out.

Thanks,
Noah Hultgren
noah@farmlandman.com
320-894-7528

Happy Thanksgiving!

Hole in One

Hey everyone,

I hit my first ever hole-in-one last week at the island green - hole #18 - at Island Pine Golf Course in Atwater, while playing in the Aggie Open. I dropped it on the green and rolled it in from about 10 feet or so. It was a lot of fun.

I celebrated by buying a beverage for my member friends on league night at Hawk Creek Country Club in Raymond, my home course.

If you want me to get results for you on your home or farm sale, call me at 320-894-7528.
I can get it done!

Take care, and have a safe and Happy 4th of July!
Noah Hultgren
The FarmlandMan
noah@farmlandman.com

Farmland Values

The number of sales happening has certainly slowed down in the last couple years, but for farmland, the values really haven't. The professional realtors at North Central Realty and myself have always worked hard to get good values for both sides of the equation, and 2010 has been no exception despite the recession.

Obviously land values vary greatly based on location and demand, and we work with a wide variety of landowners not just in Minnesota, but in Iowa, South Dakota, and other midwestern states as well. We keep track of our sales, and post some of them on our North Central Realty website. If sales in 2010 are any indication, farmland values are still going up.

In 2009, we had at least 2 farmland sales at more than $5,000 per acre - one in Renville County and another in Sibley County. We had several other properties sell for more than $4,500 per acre, including farms in Renville, McLeod, and Mower Counties in Minnesota, and Grant County, South Dakota. Just under half of the sales at North Central Realty were at $4,500 or above per acre in 2009.

So far in 2010, all of our sales have been over $5,000 per acre. This again includes farm property in Renville County, which was bought by a group of 2 farmers, as well as farms in Mitchell and Sac Counties in Iowa. If trends keep up, perhaps half or more than half of the North Central Realty farm sales in 2010 will go for over $5,000 an acre!

Please contact me to learn about our real estate services. I would be happy to help you sell your prime farmland for the best possible price!

Thanks,

Noah Hultgren

The FarmlandMan

http://www.farmlandman.com/