Illinois Farmland Values Summary

March 26, 2019

You’ve likely come to expect a springtime update from us regarding the Illinois Society of Professional Farm Managers and Rural Appraisers (ISPFMRA) Farmland Values and Lease Trends Conference. With it comes a wave of data that is carefully analyzed and put together by land professionals across the state. It is certainly a “labor of love” here at Worrell Land Services. For years, either Dad or I have been charged with helping accumulate sales results throughout West Central Illinois. The results tell us what transpired over the course of the previous year and give us a glimpse of what to expect in the current year. The study also specifically breaks down results for Class A, B, C, D and recreational acreage.

As the one who has narrated the findings for a few years in a row now, I felt like a broken record yet again. The 2018 results showed a modest decline in values for Class A, B and C acreage. Class D acreage and recreational acreage appeared to remain steady in 2018. While declines are never enjoyable, the results certainly weren’t surprising. In fact, over the last couple of years, I have been relieved the declines weren’t greater. There is so much “noise” out there revolving around agriculture that there are times when it feels like the market is being hit harder than it truly is.

The same elements that took us to euphoric highs in 2013 and 2014 are the same reasons we have been slowly coming back down to Earth. Commodities were at an all-time high in that time period. Generally speaking, corn is down around 25% and beans around 35% since that time. The stock market and other investments have also greatly rebounded since that land boom of 2010-2014. Back then, many people were scared to death of “paper assets” with memories of 2008 fresh in mind. While a robust portfolio is a positive, there is more competition in the marketplace than there was in 2010-2014. Simply put, outside money isn’t pouring into Illinois agriculture as it once was. Interest rates, although historically affordable, have gone up over the last handful of years and the rates aren’t quite as welcoming. Commodities, competition and interest rates took us sky high, but are the same catalysts that have left us seeing soft declines on annual basis since 2014. It goes without mentioning that there is great uncertainty in the global marketplace. Trade issues and macro-economic factors are giving us a lot more questions than answers. The sad fact is that, if you pulled out a legal pad and listed “pros” and “cons” on what could affect land values, the list of “cons” would likely outnumber the “pros.”

This article isn’t intended to be doom and gloom, so hopefully you’re still reading! While a decline is a decline, there are positives in this report. Our West Central pocket of Illinois remains one of the strongest, if not the strongest, areas in Illinois. Other parts of the state have been hit much worse and experienced declines years ago that we are just starting to see. “Location, location, location” is an old adage we have heard countless times, but I am happy to report that it holds true here where you own land. I am also encouraged that not all types of land showed a decline. There are certainly a lot of recreational and “D” farms in our region. The fact that those classifications remained “steady” is worth noting.

At the end of the day, the results showed an expected softening, but there are some silver linings. Those positive caveats while still sitting at strong prices from a historical standpoint make it clear that West Central Illinois continues to be a great place to own land.

Written by Luke Worrell – Managing Broker, ALC, AFM