Michigan Farm News

Benchmark data shows steady trends in land values

2018-10-15 176

GreenStone FCS | October 15, 2018 

Joe Hickey | GreenStone Farm Credit Services

Dollars-Sense-Joe-Hickey_10.15.18
This year’s report found prices for good farmland remained relatively stable throughout the territory, with a few outliers in high value areas. | Sheridan Realty & Auction Co.

Tracking the sale data generated from land purchases across Michigan and northeast Wisconsin allows our property appraisers to accurately value land for lending and other business purposes. This is critical to both the lender and the customer. To capture true land values we tabulate benchmark data in nine regions, segmented by land use within the territory. This specific data illustrates trends in the marketplace indicating areas where values may be fluctuating more than expected.

The data collected in the GreenStone territory is pooled with other Farm Credit associations to build a national database. We closely monitor land sales, both public and private, to gauge trends in the land values. Tracking this data annually keeps us aware of where values are headed and prevents any big surprises year after year.

The year-over-year change in values ranged from a 7.5 percent decrease in the northern thumb of Michigan to 6.3 percent increase in southwest Michigan. Land used for recreational purposes in northern Michigan saw a 12.5 percent increase in value.

Traditional Cropland

The benchmark study includes several traditional row crop parcels across the Lower Peninsula of Michigan and northeast Wisconsin. Values are determined for 80- acre parcels.

We see the continuing trend in our territory is that good quality farmland prices remain remarkably steady. While demand for land is still dependent largely on location, if it is next to a farm with a capacity to expand, it will sell with little negotiation for price.

The western region of northeast Wisconsin saw the third consecutive year of stable benchmark value, following consis- tent growth the previous nine years. Since 2006, an 80-acre cropland parcel has increased from $197,000 to today’s value of $375,000. In the southeast part of the northeast Wisconsin territory, the cropland benchmark (80 acres) value decreased for the third year after 12 and 18 percent increases in 2014 and 2015, to today’s ap- praised value of $520,000.

In Michigan, there was a 6.3 percent increase in the southwest, following a 7.7 percent decrease in 2017, bring the value to $408,000. The mid-Michigan area remained stable with no change at $424,000. Cash crop land in southern Michigan went unchanged for the third year holding at $280,000.

Michigan’s northern thumb area continues to hold the highest value of the regions at $576,000 ($7,200 per acre), marking a 7.5 percent decline this past year. The Saginaw Valley cash crop land in Michigan, on a per acre basis, had a slight 0.7 percent drop to $6,375, coming down from the highest value recorded in 2014 at $7,406.

The lower corn and soybean prices have stabilized the base rental rates in the Thumb region to the $200 to $225 range for properties with higher productive soils. We expected rates to decline, however with the continued competition for land, land owners have no motivation other than relationship loyalty to lower rates.

Dairy

The appraisal of the Michigan dairy with 1,600 freestalls on a 40-acre site showed a 5.5 percent decline to $4,500,000, down from the 10-year high of $5,200,000 in 2015. The 60 tie-stall and 40-acre site in Wisconsin showed no change for the second year, holding at $318,000.

Recreational

The 80-acre recreational benchmark land surveyed in northern Michigan saw a second year of increased value, coming in at $144,000 ($1,800 per acre) up from $128,000 in 2017. Recreational tracts for hunting, fishing and non-consumer uses are in demand in Wisconsin and northern Michigan.

The residential and recreational sales activity for loans has improved slightly in 2018. Demand for rural residential houses in the Thumb region attract hobby farm buyers and rural “estate” buyers. We are finding with income increasing, more high- income wage earners from neighboring cities are investing in real estate.

Transitional

GreenStone monitors three areas in the transitional land category southeast Michigan (Ann Arbor area); Lapeer County, Michigan; and Brown County, Wisconsin. Transitional land is defined as a property between uses with the current use likely to change.

The 40-acre tracts in Michigan showed modest gains with the land in the south- ern part of the state increasing 1.3 percent over 2017, to a value of $320,000 for the 40 acres; this increase follows double-digit growth in 2015 and 2016. Transitional land in Michigan’s thumb (Lapeer County) showed a slight decline of 2.0 percent to $160,000.

Other Revenues

As commodity prices remain poor, we are seeing some farmers look toward non-traditional avenues for profits, including specialized enterprises and energy-related opportunities. In the thumb region, organic and non-GMO production continues to develop with local growers developing a network to market their production. Demand for this pro- duction stems from egg producers, freezer beef feeding operations, specialty food retailers and large food grade milling companies.

Hickey is vice president and chief appraiser at GreenStone Farm Credit Services.

Leave a comment
Name *
Email *
Homepage
Comment

Columns

Market Outlook: Large corn inventories don’t bode well for price outlook

Dr. Jim Hiker | November 30, 2018

 Jim Hilker png(1)The November USDA/NASS Crop Production Report showed U.S. 2018 corn production to be 14.6 billion bushels, down 1% from the October estimate. It would still be the second largest crop on record, just below the 2016 record of 2016 of 15.1 billion bushels. 

Weather Outlook: Warmer and drier days ahead…

Jeff Andresen | November 30, 2018

Jeff Andresen pngThe development of an upper air trough across central and eastern North America during the last week of October led to northwesterly flow across the Great Lakes region and to an extended period of early winter weather through much of the first half of November.

Field Focus- November 15, 2018

Welcome to the 2018 Field Focus feature. This year, six of our seven reporters are members of ProFile, a leadership development program of Michigan Farm Bureau. In each print edition of Michigan Farm News through the growing season, these young farmers will tell you about conditions on their farms and their regions. 

 

Weather Outlook: Above normal precipitation to continue

Jeff Andresen | November 15, 2018

Jeff Andresen pngSeasonably cool and drier weather developed across the Great Lakes region during late October, allowing a resumption and/or acceleration of fall harvest and fieldwork activities across Michigan. With a persistent troughing pattern in place during much of the latter half of October, temperatures fell to below normal values, slowing grain dry down and soil evaporation rates.


Drier days ahead for harvest?

Jeff Andresen | October 30, 2018

Jeff Andresen pngThe jet stream flow across North America changed dramatically during mid-October, with the transition of the highly amplified western troughing/eastern ridging pattern of the past few weeks to a western ridging/ eastern troughing pattern.