Like sowing quality seed into good ground, there’s a harvest of good news regarding the value of farm and ranch land. Due to impressive crop yields, as well as strong cattle prices and grain and soybean prices now and over the past five years, we’re experiencing a thriving, competitive market for selling farm and ranch property. Three seasoned real estate brokers based in North Central Kansas told the Fence Post, that the current trends are very positive, and land prices are high.
“Prices are at their highest level in history, and it’s been that way for awhile,” said Raymond Bott of Raymond Bott Realty and Auction, in Washington, Kan., and in the Real Estate business since 1982. “In this area, we’ve had really good crop yields and cattle prices, as well as grain and soybean prices for about five years. Also, we’ve got low interest rates; both from the investor standpoint, and the borrowers.”
As an auctioneer, as well as a real estate broker and a farmer, Roger Novak, of Roger Novak Real Estate and Novak Brothers and Gieber in Belleville, Kan., scrutinizes the market from several angles, and likes what he sees ... very much.
“The land market is strong — no question about it. It’s the highest land prices we’ve ever had in my lifetime,” exclaimed Novak, in his typically enthusiastic baritone auctioneer’s voice. “It’s kind of an unchartered run out here. It’s because of low interest rates and high grain prices,” he emphasized. Novak began his real estate career in 1982, but has been farming with his wife Jean and son Jeff since 1967. They raise wheat, corn and beans, as well as cattle.
A third real estate broker in Kansas agreed that trends are looking good.
“Land prices are going up. Seems each sale is better than the last one. The only thing that could slow it down is if commodity prices go down, or the interest rates go up, because they’re historically low,” observed John Rhine, real estate broker with The Realty Associates in Belleville, Kan.
Recent welcome rains have relieved some drought worries, but even before the lush April rains in Kansas, the real estate professionals say the drought did not affect land prices.
”No, not in this area. The drought seems not to have an impact in this area, yet anyway,” said Bott.
“It hasn’t, as yet. It’s been a short term drought here, so far. But south of here — they’ve had two years of dry weather,” noted Novak.
Here’s the latest from the experts:
Bottom Land vs. Upland:
“There’s a really good demand for good quality land; be it cropland or pasture. If it’s good, it’ll bring a good price,” said Bott.
Novak notes that bottom land and flat upland will bring about $2,000 more, on average.
Rhine agreed, it’s all about the bottom dollar.
“Bottom ground or level cropland will bring more than the rolling upland,” said Rhine.
Irrigated Land vs. Dryland:
“Irrigated land with good senior water rights and good soil, will bring your top dollar,” advised Bott. “In some places, water rights are being cutback.” In that case, he suggested contacting a state official with a Water office or the Board of Water Resources; especially regarding land along a river; such as the Republican River in Kansas.
Novak said he doesn’t sell much irrigated ground in Kansas, but notes it would be, predictably at a higher price.
“Good pastures are selling really well. They’re going for about $2,000 an acre in this area, and that’s a lot of money,” said Bott.
Novak also said pastures are selling well.
“That’s because cattle prices are really good right now,” said Novak, adding, “Some of the pasture land is being torn up and terraced now, so that it can be farmed.”
“Yes, pastures are pretty steady,” Rhine said, noting “I’ve been hearing about really high prices for cow/calf pairs and for pasture rent, probably due to the drought and the fact that there’s pasture which got hurt because of the drought.” Rhine said it takes a couple of years after a drought, for a pasture to return to its full potential.”
Besides driving land prices, the high price of commodities and cheap interest rates are also making machinery more valuable.
“Used machinery is in really good demand right now, because you have cheap interest and the price of iron is high,” shared Novak.
Many farming costs are increasing.
“Input costs to put crops in, seem to be climbing all the time. Chemicals, seed, machinery costs too ... are all going up; probably because commodity prices are good, and they can get it,” said Rhine.
The market forecast, according to the three seasoned Real Estate professionals, is that the land market will continue remaining strong-as long as interest rates stay low and grain prices stay high.
“As long as interest rates stay down, and grain prices stay high — everything will pretty well stay the same and it’ll be a steady market. That will continue until either interest rates go up, or commodities go down. Its supply and demand,” Novak calculated. Bott similarly summed it up.
”As long as we have good yields and good calf prices, and interest rates are low, we’re going to have high land prices,” said Bott.
Rhine’s forecast is also to stay the course.
“I think things will stay pretty steady for now, unless the grain prices go down and interest goes up,” Rhine predicted.
Here’s another perspective for investors.
“People with cash to invest — don’t really get much at all at conventional places to invest, so land is a good investment,” said Bott. “So, selling land at public auction is not only competitive, it’s fair, and is the best way to sell land,” Bott stressed.
“The best way to sell, is the best way to buy. It puts everybody in a level playing field,” Bott stated. “You publish how it’s going to be, and everybody can base their decision on the terms that are known ahead of time, and it reduces the negotiating time down to a few minutes.”
Good news is always welcome, and the farm and ranch real estate market experts are chock-full of positive energy.
“It’s going to be a good market. When I started farming, the cheapest I could borrow was 5 percent interest, and right now you can borrow cheaper than that,” Novak relayed. “We have a good outlook now.” ❖
“The land market is strong — no question about it. It’s the highest land prices we’ve ever had in my lifetime.”
~ Roger Novak, of Roger Novak Real Estate and Novak Brothers and Gieber in Belleville, Kan.,