Farmland Market Outlook for 2022

What Will the Farmland Market Look Like This Year?

As a farmland auctioneer, the number one question I have been hearing recently from farmland owners is, “What will the farmland market look like this year and will land values keep increasing this year?”

Although I cannot predict the future unfortunately, I do believe the farmland market and prices will stay strong this first part of the year up till planting season. After May, my confidence of where farmland prices will be decreases due to many factors that affect farmland prices. Here is what I do know from research and trends of what happened last year that is a good predictor of where farmland values will go in this new year.

Factors that Affect the Increase and Decrease in Farmland Values:

I’ve been a farmland auctioneer and real estate agent with DreamDirt for a few years now. This past year was one for the books with record auction prices! 2020 was a hard year for all with COVID restrictions. However, farmland sales started to pick up towards the end of 2020 and really took off in 2021! There were not very many farms for sale in 2020. This made demand strong for any farmland that hit the open market – creating strong values.

Online auctions became more popular in 2020 and continued into 2021. At DreamDirt, we have been selling farmland online for 10 years now! We were the pioneers of selling farmland online so it was not new to use. Our online auctions are proven to be powerful! Our team understand how they work, and we own our own bidding software which many of our competitors don’t have! We also still offer live in-person bidding auctions. If you’re deciding what’s best for you an online or live auction check out this blog!

Online Farm Auction Technology

The value of technology helped prices increase. There was more use of online presence for prospecting buyers to see. Also, the  ease of bidding online instead of showing up live in-person for conveniency increased bidding numbers. We often hear from our online bidders that hitting the bid button became addicting! They didn’t want to loose the farm, so they kept bidding – “just one more time”.

Farm Commodity Market

The commodity market and prices of corn and beans really played a factor in farmland prices. In June 2021, is when we started to see the effects of commodity prices play into farmland prices. With increasing commodity prices, demand for farmland increased resulting in higher prices of good tillable land. Demand continued to be strong throughout harvest and at the end of the year.

Interest Rates

Low interest rates has had a significant effect on farmland values. With more buying capacity, both farmers and investors demand for buying land increased. The competition between bidders resulted in record breaking prices!

Capital Gains Tax

The tax policy increase proposal from the new president encouraged sellers to sell this past year. Due to estate inheritance and capital gains. Although we won’t see the Estate Tax increase this year, sellers might take advantage of selling before 2026 when it is brought back to attention.

Is now a good time to sell farmland?

Have you been waiting for the best time to sell farmland? I believe sellers that were on the fence of selling the past couple of years realized NOW is the time to sell! They are taking advantage of the high prices while they’re here! Jim Rothermich, an appraiser from Iowa, kept track of all the acres auctioned in 2021. Which was a total of 142, 756 acres! There truly is no wrong time of year to sell farmland. If you’ve recently inherited land, looking to retire, or needing financial relief, the best time is when it’s right for you! Heck, you can even sell farmland when there’s crop in the ground during the summer!

Future of farmland prices

Riight now we know where the market is for farmland. Six months from now my confidence in prices staying high goes down. We don’t know where interest rates and commodity prices are going. Which play a huge factor. Inflation might also play into increase in farmland values this coming year. Now is a great time to sell especially before the new crop season. If you do have a tenant on the farm, don’t worry. We can structure your sale to accommodate the farm lease for 2022 crop season.

How much is farmland worth?

If you’re thinking of selling land – a great place to start is by requesting both a free market evaluation consultation and our ebooks! Email me at [email protected] or call/text me at 515-954-8063 to receive more valuable information!