From farmprogress.com and written by Doug Hensley, President of Hertz Real Estate Services and one of our valued API customers from the state of Iowa.
I grew up on a farm, so I know each new year always brings hopeful optimism for those in agriculture. We budget and plan based on realistic outcomes and 10 years of actual production history, but we drive and nurture to outperform those estimates. So, as I apply that same exercise to the land market, what can you expect for 2024?
We ended 2023 with a stable market, having plateaued from the incredible run-up from 2020 to 2022. In the second half of 2023, market-wide sales volume noticeably slowed in comparison to the 12 months prior, and inputs like fertilizer softened leading into the 2024 crop year. These shifts in sales volume and input prices supported land prices. However, much lower commodity prices and much higher interest rates should point the market downward.
In this 2023 tug of war, it seems recent year profits – or in other words, cash piles – were still available to power many land purchases. Therefore, strong liquidity and cash availability helped the land market remain resilient in the face of underlying pressures.
Will this continue in the new year? I expect it will, depending on the area. For the sales reported below, however, it is obvious that there is still more strength than weakness.