Trend Watch: Income-Producing Properties

Check out this informative video from ranch brokers Ken Mirr and Jeff Hubbard of Mirr Ranch Group.

Ranch brokers Ken Mirr and Jeff Hubbard discuss the increase in demand they are seeing for income-producing properties for sale. These ranch experts suggest that this type of ranch, coupled with recreational values, makes for a truly special property. Thunder Ranch, a Utah ranch for sale, is used as an example.

Record 17% Jump in Farmland Values

Farmland values in the Federal Reserve’s Seventh District climbed a record 17 percent during the second quarter of 2011, according to the Chicago Fed’s Farmland Values and Agricultural Credit Conditions Report. This economic shot in the arm marks the largest year-over-year gain since the 1970s for the District’s five-state area—one of the most productive regions in the Midwest. The value of “good” farmland increased 4 percent during the second quarter, compared with the first quarter of this year.

The report was compiled from the Chicago Fed’s survey of 226 bankers in the District, which includes Iowa, Illinois, Indiana, Wisconsin, and Michigan. Findings revealed that higher revenues for crops and livestock, coupled with growing investor demand, fueled the rural real estate roll. Agricultural mortgage rates averaged 5.62 percent—a record low that also contributed to the surge in District farmland values. Some respondents cited a higher-than-usual number of summer auctions as a factor.

“The combination of higher revenues for crop and livestock production has been an impetus for the significant increases in agricultural land values seen this year in the District,” the Fed reported in its newsletter. “Demand for farmland remained strong from both farmers and investors.”
Among the District states, only Wisconsin had a smaller year-over-year increase in farmland values in the second quarter of 2011 than in the first. Year-over-year land values in Indiana and Iowa climbed 21 and 20 percent respectively, while values in Wisconsin rose a modest 8 percent. Fewer than 2 percent of the survey respondents expect farmland values to decline in the third quarter of 2011.

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David Oppedahl, a business economist for the Chicago Fed, shares the bankers’ notion that the spike is no fluke. “Overall, the higher level of corn and soybean prices looks to be something that will continue through the end of the year,” he said early this week. “I think that over the next year we aren’t going to see any declines, and we are going to see continued increases, though probably not as strong as over the past year.”

On November 15, 2011, the Federal Reserve Bank of Chicago will hold a conference to explore the factors contributing to large increases in agricultural land values and cash rental rates in the Midwest. The details and agenda are available HERE.

Farmland: Eye on Iowa

When Warren Buffett talks up farmland, it’s time we all took a look. Buffett made the following statement last month while being interviewed by Becky Quick on CNBC’s Squawk Box. Read more

Top Ethanol Producer Files For Bankruptcy

One of the leading stories of 2008 has been skyrocketing commodity prices and the corresponding surge in land values throughout the Midwest, Great Plains, Southwest, and other mineral-rich areas of the country. Although the bubble has by no means burst, there are definitely signs of a slowdown, particularly given the recent bankruptcy filing by one of the nation’s largest ethanol producers, VeraSun Energy Corp. Read more

“The Land Market Has Never Been Stronger”

So says Mac Boyd, a broker at Farmers National in Arcola, Illinois. Boyd is just one of the many veteran real estate professionals who are closely monitoring the strongest farmland market in decades. Read more

The Clean Energy Scam

Amazing new diets, intriguing self-help books, a daily dose of St. John’s Wort – we are a country obsessed with quick fixes. Now, as Time points out in this cover story titled The Clean Energy Myth, we can add ethanol to our national wish list. Read more

Corn Drives Land Prices Higher and Higher

It’s official. The New York Times proclaimed in August that the market for Midwestern farmland was “hot,” a declaration akin to labeling Hurricane Katrina “dangerous” two weeks after it devastated the Gulf Coast. Anyone remotely familiar with the Corn Belt knows that rural land prices have skyrocketed for several years. Here’s a rundown of some recent figures. Read more