In recent years, farm real estate (land and structures) has typically accounted for about four-fifths of the total value of U.S. farm assets. (See more on farm assets and debt, including real estate.) Following the 1980s farm financial crisis-during which farmland prices declined in response to rapidly rising interest rates and higher energy prices-farm real estate values (land and buildings) rebounded. Farm real estate values have leveled off since 2014, after exhibiting rapid growth over the previous five years (2009-14). USDA’s Economic Research Service (ERS) research examines trends in farmland values, and assesses the effects of both macroeconomic (interest rates, prices of alternative investments) and parcel-specific (e.g., soil quality, government payments, proximity to urban areas) drivers of farmland values.
Research findings indicate that, since 2009, U.S. farmland values have been supported by relatively strong farm earnings. However, there have been periods of imbalance in the past, including 2005-08 and the 1978-85 farm financial crisis. In addition to farm earnings, historically low interest rates contribute to the farm sector’s current ability to support higher land values. After a slight decline in 2016, average U.S. farm real estate values rebounded in 2017, reaching $3,080/acre in nominal terms ($2,728/acre in real terms). The resilience in average farm real estate values has persisted, despite recent declines in sector-level farm income that followed a record high in 2013. (See the data product on Farm Income and Wealth Statistics.)
Average U.S. farm real estate value, nominal and real (inflation adjusted), 1967-2017
Regional variation in farmland values is significant, owing to general economic conditions, differences in the health of local farm economies, policy, and location-specific characteristics that affect the returns to farmland. In the Corn Belt, farm real estate values were over twice the national per-acre average in 2017, while values in the Mountain region were less than half the national average. Individual regions have also experienced different trends in appreciation in farm real estate values.
Over 2016-17, the Pacific and Southern Plains regions saw the highest rates of annual appreciation of 8.7 percent and 6.2 percent (to $5,370 and $2,050 per acre), respectively. In contrast, farm real estate values in the Northern Plains and Corn Belt, two major cash commodity production regions, continued their recent downward trend, with respective declines of 1.8 percent and 0.5 percent (to $2,200 and $6,260 per acre).
Farmland values also vary by land use. In 2016-17, national average cropland value held constant at $4,090/acre, while pastureland value ($1,350/acre) exhibited a minor uptick of 1.5 percent. Cropland has historically maintained a substantial land value premium over pastureland due to the higher per-acre returns associated with crop production.
Although cropland values are higher than pastureland values in each farm production region, considerable variation exists across the U.S. in the magnitude of the cropland/pastureland value disparity. For instance, the Southeast has the highest pastureland values in the Nation ($3,910/acre), leading to the smallest regional cropland/pastureland value differential (less than 1 percent). In contrast, cropland values in the Pacific region are nearly four times higher than pastureland values.
Annual farmland rents measure the value of using land for agricultural production in the current year. Similar to the national pattern for farmland values, cropland cash rents are much higher than pasture cash rents. Over 2016-17, average national cropland rents held constant, while pastureland rents declined by 4 percent.
Although the nationwide average remained constant, the Southeast (10 percent) and Pacific (7 percent) had the largest increases in cropland rents, while the largest annual decline occurred in the Northern Plains (-4 percent). Regional changes in pastureland rents were more varied over the past year, with the largest relative increases in the Northeast (16 percent) and Lake States (6 percent), contrasting with declines in the Pacific (-18 percent) and Delta States (-8 percent).
For ERS research that examines the factors contributing to these changes in historical relationships, see:
• Trends in U.S. Farmland Values and Ownership (February 2012).
Average farmland value and cash rent by farm production region, 2017 (dollars per acre)
Region; Farm real estate value; Cropland value; Cropland rent; Pasture value; Pasture rent
Corn Belt; 6,260; 6,670; 201; 2,380; 37.5
Pacific; 5,370; 6,570; 262; 1,650; 11.5
Northeast; 5,050; 5,350; 78; 3,420; 36
Lake States; 4,890; 4,830; 153; 2,080; 33.5
Southeast; 3,870; 3,940; 86; 3,910; 20
Appalachian; 3,800; 3,890; 99; 3,340; 21
Delta States; 2,910; 2,760; 109; 2,480; 17.5
Northern Plains; 2,200; 2,830; 102; 1,040; 21.5
Southern Plains; 2,050; 1,930; 38; 1,620; 7.7
Mountain; 1,130; 1,780; 90; 625; 5.4
U.S. total (48 States); 3,080; 4,090; 136; 1,350; 12.5
Source: Land Values, 2017 Summary, USDA, National Agricultural Statistics Service, August 2016
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