Friday, May 15, 2015

Real Estate: Outlook Bleak for Signs of US Farmland Price Revival Taking Root

From Agrimoney:
The outlook for a return to growth in US farmland values, particularly cropland, appears bleak despite scattered signs of an early-2015 recovery, central bank data showed.

Land prices in the Corn Belt returned to growth, quarter on quarter, in the January-to-March period - albeit by only 1% - including gains in Iowa, the top corn and soybean producing state, Federal Reserve data showed.

"All states had improved results," said the Fed's Chicago bank, whose region also includes states such as Indiana, Iowa and Michigan.

In the central Plains wheat-growing region, covering states such as Kansas, Nebraska and Oklahoma, while prices overall "edged down", the decline in values of non-irrigated farmland slowed, a report from the Fed's Kansas City bank showed.

Few expect values to rise
However, neither banks, following surveys of lenders in their regions, held out prospects for sustained price gains, particularly for arable land, for which values are being weighted by weak crop values.

The Kansas City Fed said that in its area "very few bankers expect price appreciation", with more than a quarter of lenders surveyed expecting cropland values "to decline further in the next three months". 
In the Corn Belt, "almost half of the survey respondents predicted farmland values to decrease in the second quarter of 2015", with less than 1% foreseeing price rises, the Chicago Fed said.

The Corn Belt farmland market had proved "sluggish", with 46% of lenders contacted reporting a drop in demand, compared with 8% seeing an increase.

Ranchland to buck trend
The best hopes for appreciation appeared to be for ranchland, of which values were being supported by relatively buoyant livestock prices....