Land Prices!!! CRAZY!!!!

JD Seller

Well-known Member
There are two farms owned by the same family. They where put in a trust by the Father. The farms could not be sold for so long after his death. The rent profit was split between his kids/families. My family has farmed this ground since before the Father passed away. It is 56 years this crop year. The trust matures this July. The kids have already sold the farms but the actual transfer can not happen until this fall. They called me with the final numbers today. The 300 total acres sold for $11700 average. We DID NOT bid anywhere near that. This is farm ground with an old house and two barns. It is not anything but farm ground. It is too far away for any development and does not have any high value buildings.

So this year will be the last time we farm this ground. Kind of sad in some ways but not as bad as giving $11700 for it. LOL This ground is not the best by any yard stick. The CSR is in the 60s. The one farm is 75% clay soils on steep banks. In a real dry year they will yield very little. In a wet year they yield just as bad. So about 30% of the time your crop on those acres is not good.

The two fellows that bought the farms are in their 70s. I can not see giving those kind of numbers for marginal ground when your that old.
 
Around here I see land going for $35k an acre and the ground is pretty much solid rock and covered in Cedar trees. You can't do anytb I ng with it. The other side of the county is farm land and it is cheaper but still high.
 
Jdr315- "Around here I see land going for $35k an acre"

Is that $35,000/acre Ag land or "developed" homesite properties?
 
I agree that price is unrealistic if you have to pay for the land with what you can grow on it. Heard today about some farm land in IL. selling at auction last week for $17,000 per acre. Can't see how that will ever pay.
 
I sense a little bitterness in your post. Lets put a positive spin on this. Averaged out you must have made a prophet on this land for 56 yrs. Other wise you would not have continued renting it. Be thankful for that. Be happy for the selling family. They truly hit the jackpot. There may be reasons unbeknownst to you why the buyers felt it was a good move. 1031 comes to mind but there may be others. For some reason they felt it was worth paying that amount and are happy they got it. Sounds like everybody came out a winner.
 
Land prices in my area have receded slightly in the last couple years. I have never understood why families sell something that could provide income for generations, and that they will never be able to have again. The dollar amount sounds good on the face of it, but split between lots of family members, could be frittered away in less than two generations.
 
JD, I've rented my farm out since 1997 due to health issues of two children, and later on, myself, also.

A sort of friend since childhood has bitched for years about us evil landlords, or what $$$ estate land sells for.

A long time ago, I said "Carl", if the day comes when you can no longer farm your land (or your family) and you decide to rent it out or sell some, will you be looking for the lowest bidder?

He didn't understand where I was coming from 'til some health issues cropped up in his extended family, as well as a couple of brothers wanting to retire.

5 brothers farm around 60 quarters of land, there's only ONE son from all that that is a part of the operation, plus a nephew that's come back to farm, last time I talked to him they're gonna let some go.

From your posts, I seem to recall you have a couple of sons to take over your operation, not everyone is in that situation, and the value of land sure looks different from the perspective of us that haven't got family wanting to take it over vs. a non-farming family that wants to cash out!
 
They will ALL have the money spent in a year or two. They have been getting rental income that is right at 4% of the farms value. That includes the house and land. They will not get anywhere near that with just "Money".

My family and I have made money running the farm we also have built the land into what it is worth today. When we first started farming the ground it was not in very good shape. Over the years we have improved the drainage and fertility of the ground. They would NOT be getting the money they are if we had not improved the ground.

It makes you really want to just treat the land as a one year deal and the heck with building it into anything better. Just two years ago I spent two weeks digging tile lines in with them just paying for the pipe. I point blank asked them if the family intended to continue the trust. They assured me that they did. Well that was BS. So they got some cheap tilling done.
 
The crazy thing is, that'd be low in many parts of Ontario. The dairy guys are the ones that push the price up. There was 100 acres that sold for 1.6M. About 95 workable with 10 of those being drained low land that still gets fairly wet. There are a lot of farms that'd average 15000 on 100 acres. It works until it doesn't.
 
Always love to see comments like "Around here, yada yada yada." Might be helpful to say just where "around here" is.
 
Curious.....what is the background of the two 70 yr. old guys that can afford to spend this kind of $$$$.....farm families.....retired John Deere factory guys.....local lawyers.....gambling boat owners......construction company owners.....out of state investors.....Chicago guys.....car dealers.....inquiring minds want to know.
 
I don't want to get into an argument here but please stop. They probably had every intention of continuing the trust until they found out they could sell it for $11700. 4% of 11700 is 468/acre. No way you or anybody else would pay that kind of rent. They saw an opportunity and they jumped on it. Can't blame them for that. Obviously you know them better then me but do you really know them well enough to say they will ALL(your words)have it spent in 1 or 2 years? That's quite an accusation. If you don't think it pays for the buyers to pay that kind of money for that quality of land then how can you think it pays for the sellers to continue owning it for that kind of money?
 
North of me just a couple miles was a lop and auction a few weeks ago. Here in southern MN.

A state highway cuts them in half diagonally, so not square, not full 80s. One side has the old farm yard on it, no usable buildings, old grove is all, it's declared a wetlands so you can't even clear it here in my state. The rest is rolling hills and pretty wet. Typical ground for around here, good, but not at all perfect. Will take $700 an acre tile to make the ground good. The other side is about the same, but no declared wetlands so can farm it all.

The better side was bid to $6800, the side with the grove was bid to $6200. No sale.

I heard later the owners had a minimum of $8000 an acre on it.

Has had for sale signs up now for a couple week, them last week it said sold.

Haven't heard if they got a better offer or not over the auction price. Probably have to wait until the county online property look up gets updated in the next 6 months.

4 years ago some land nearby sold for $10,500. That's crazy for the rolling hills, wet ground we have in these parts.

Paul
 
Farming is a business, most businesses are not passed down between generations, nor are many farms. Farm land is just another commodity whose value is set by a market, there is always some farmland for sale somewhere. A change in interest rates, a change in the next farm bill, a change in crop insurance rules or subsidies, a new tariff or another retaliatory embargo, a change in the mandated use of ethanol, or any of many other influences could send farm land prices falling or crashing, just as it has before. Five years from now selling a today's prices could look like a smart move or a dumb move.

I'm not sure what you are upset about? The family has every right to sell whenever they choose to. It sounds as if they are following a plan, a plan that was probably decided and agreed on decades ago. They also have the right to sell to the highest bidder. Are you kicking yourself for not bidding $11,750 per acre or higher? Paying for capital improvements on rented property is always a risk. Renting the same land for 56 years is a luxury few other farms enjoy.
 
Some large dairies and other large livestock operations are bidding up nearby land to gain a close place to "dispose of" manure. Some landlords limit the amount of manure and salt that can be applied on their ground.
 
(quoted from post at 20:05:14 02/22/17) Around here I see land going for $35k an acre and the ground is pretty much solid rock and covered in Cedar trees. You can't do anytb I ng with it. The other side of the county is farm land and it is cheaper but still high.
'll sell you my whole ranch lock stock and barrel for $3K per open acre 1800 total 1200 open,the rest is bush, all of it arable. :lol:
 
Well I'm right at 65 and if I can write the check and really want something like that land I'd buy it.No farm land where I live can come close to being paid for farming it and apparently its
starting to be that way where you're living.
 
That was one of the things that became apparent when I read books on the history of Bonanza Farming: At certain times in the economy, it became more profitable to sell the farm land than to farm it themselves or to rent it out.
 
We live in eastern Canada in PEI,we have dairy but it's mainly a potato province,most people grow for cavendish farms fry plant since McCain's left
 
That practice will come back to haunt them. On our eastern shore one of the chicken processors disposed of manure and carcass left-overs by spreading heavily on some ground. The run-off caused an algae bloom in nearby Chesapeake Bay waters and got a lot of interest.
 
These types of events will never stop until government payments stop. That includes subsidized insurance. Farmers will continue to get fewer and larger until the government gets their paws off..
 
i am in ohio between the wheeling and columbus a farm with a decent house and barn with 80 acres with half of that woods the farm land will be rolling hills will bring around the $5000/6000 acre.makes it tough for any young couple around here to get started in farming.
RICK
 
That is the going rate in our part of Ontario as well. Makes for a little better retirement....(;^) Ben
 
I would be ill as well after devoting your work over the years in improving this piece of ground, and in the end you are left with nothing. Your point about not having to worry about making those payments are what I would look to and focus on when the disgust is overwhelming. Nathan
 
It's interesting the number of comments of the "value" of the land. Some of you guys are on the side that the best value is the rent income, and others are of the land itself. Land ownership needs to be looked at from two perspectives. 1: What annual income will the property produce? Rent - taxes and other expenses. How much rent a farmer can pay is directly tied to program payments, and these payments vary widely from region to region. 2: What is the investment potential of the property? The last 20 years the growth in land values couldn't be beat for an investment. The 20 before that, you did well if you didn't loose on that investment. What will happen in the next 20?

Most people operate on emotion. Today's investment outlook is that the stock market is going crazy, and land values will level off with commodity prices in the dumpster. Why wouldn't I sell land and buy stocks?
 
You are lucky you are in central Ohio. Here on the western edge of Ohio, 2 farms near me have sold in the last few months. One was over 10,000/acre, the other over 11,000/acre. Farm ground only, no buildings. These will not be developed. If I saw anything here sell for under 10,000 an acre, I would buy it as long as the parcel size wasn't so big I couldn't afford it.
 
We were in Lancaster PA last summer and found this tidbit if info interesting.

With the demise of small dairies in NY and skyrocketing land prices around Lancaster, some Amish families are moving to NY and buying old dairy farms as the land is cheaper. I guess I'd rather see that than another subdivision.
 
Like a few others from Ontario said, that price per acre is low compared to here. 2 years ago I was offered 18000 an acre for my land so the neighbor could expand his broiler operation. Mostly it's the dairy guys driving the price up in this area, they aren't hurting for cash at all.
 
Yes, land prices are high. Did the brothers who bought it need to park some money somewhere? Perhaps they thought it was a "safer" investment than stocks, etc? Especially if children are farming with them?

It seems like we should be on the back side of a land bubble right now. Have any comparable farms sold lately? If you bid on it, did you have it appraised first? I'm curious what an appraised price would be.
 
It's pretty simple to me, if I cant pay for the land and make a profit and have a positive cash flow THEN ID CHOOSE NOT TO BUY IT. However if another chooses to invest at X dollars per acre, its their NOT my decision. Just because I wouldn't pay x dollars per acre doesn't mean one who does shouldn't have that free choice. Being a free market capitalist instead of any form of a socialist, I have no problem with some dude who chooses to make a profit by selling the farm or one who chooses to buy it I DONT WANT BIG BROTHER DICATING FARM PRICES, let the free market set the prices instead. What I have now is due in large part to my buying and farming then selling farms for a profit over many years IF THAT MAKES ME A BAD PERSON THEN SO BE IT, GET OVER IT....

Soooooooooooo since I'm free to buy or not to buy and others are free to buy or sell at whatever their price, I'm sure NOT complaining about farm land prices. Whats the alternative??? Government sets the prices??? Its like if you cant stand the heat best get out of the kitchen lol. Id bet a person who says land prices are too high might think otherwise when its his turn to sell AND BETTER NOT LET ANYONE TRY AND PREVENT HIM FROM SELLING AT X DOLLARS PER ACRE THEN !!!!!!!!!!!!!!!

John T Conservative free market kinda guy, TO EACH THEIR OWN if land is too high in my opinion I wont buy, but if others choose to that's THEIR OWN decision
 
Land control is a funny thing. Farmers really get attached to a property. After 50+ years I would be pretty attached to it as well.

But, he's still 'just a renter.' If you need to hold the land dear, you need to own it.

Yup, it's a lot harder to own land. You will expand slowly, and owe a lot. But after 50 years, it would be yours, to rent or sell for big bucks.

If you rent it, you are mostly year to year and that is all you should put into it.

I certainly understand the emotions, but.......

Paul
 
Read what you just wrote "Renting....in the end you are left with nothing".BINGO! DUH that's what renting is all about right? You just made the best argument to buy land to operate
on even if its a little high to start with.
 
You can thank government subsidies for the fact that dairy farmers are wealthy and driving the inflated cost of land.
 
Yes land prices are crazy in south west Wisconsin the amish and government plus big dairys are driving prices up. The amish are getting low intrest government loans buying anything then can get there hands on then plow everything up even ground the bigger guys wont.The bigger dairys and mid size dairys are also looking for land we have one guy daily hauling with tractor and large spreader several miles and you can imagine what damage that does. Corn farmers they to are pushing prices up .
I was renting to a guy every spring he complained about the high price of rent and he never said a word about the time corn and beans hit the high spots . Over the years he has lost ground people would get tired of listening to him he got his farm paid for and nice vacations his son is to lazy to get out and work and never would touch a manure shovel but he has a nice house.
Yes there were good years i know what his government payments were but it was funny that even as my taxes and my cost went up he thought it was ok that i got half what everyone else got .When i put my farm up for bids it was surprising that so many thought it was ok that i got half price but then a young kid with good strong family and over a century of farming behind this family (they must be doing something right never building fast good solid growth) came up and said business is business . I thought about that did the previous renter when times were good did he share that or did he put the extra in his family's pockets? Yes he had more risk but i farmed also and because of that i knew what kind of land this was but is it worth it ? Granted i do have an unique opportunity here i don't have family but even with family this can be provided to others put the previous renter in the agreement we had he could have bought this farm for a thousand an acre land next to it was selling for over ten. I still can't believe he walked away from that he wouldn't even place any bid cost me over six thousand in legal bills to put the fence back in between us his thought was i would give him twenty thousand a year and give to his son free my farm. He is very mad that i grabbed this opportunity at getting a better life and now i might be looking at a new house thankfully one with no stairs as i get older its getting harder to work two jobs to pay the bills and now with a better renter its possible.
Is this going to continue that was one thing i thought of before i switched so far this new renter has paid higher rent done bulldozer work spread lime and made this farm and my life better yet there is a lot of people that would think this is wrong. Well i take less in the future now that i put up a new house and fixed up the farm like i said I've been around farming all my life i seen good times and bad i learned to improve in good times and sit tight in bad YES I WILL TAKE LESS this renter improved my life and my farm when he could he will take every opportunity to make it better all i ask is honesty he will also have the opportunity to get this farm at half price when i am gone for the simple reason he shared when times were good he helped out and never once have i heard him say i did this he should be grateful .
 
In general supply and demand control prices. The population of this country continues to increase so the demand increases. When I was a kid I think the population was in the 150million range, (50-60s), now I think it is in the 300 million area. Those people are living where nobody lived before. Whatever the cause, couples having more than 2 children, immigration, whatever, I an not arguing that here just stating what I believe is the cause. If the population was steady or declining it would seem that there would be empty houses and land that couldn't be sold or sold slow and the price would come down. This happens some when the economy is slow, but then goes back to increasing prices.
 
The trouble is land quality in lots of places in NY are not what they are in SE PA or northern MD. Marginal ground will make you tread water financially.
 
You say that your family has been farming this ground for 56 years. Then you say that the ground is marginal, unsuitable for development, and undesirable. Yet, you wanted it.
This sounds a bit one sided to me. Like maybe it isn't so marginal after all? Or maybe it really IS suitable for development? Or are you just plain angry at losing out on what you thought was going to be a slam dunk on some cheap land?
Either way, those are the pitfalls of developing or improving somebody else's land. Unfortunately, at sale time, you get no credit for what you invested into it either in time, labor, or money. Over the years, I have followed a policy of NOT investing in things that do not belong to me. Whether it be a rental car, rented housing, or anything else along those lines.
 
You mentioned they were making 4% on their money renting it out.

Are you saying you were paying over $450 an acre rent to them ?
 
Sorry, posted in wrong place below

It's pretty simple to me, if I cant pay for the land and make a profit and have a positive cash flow THEN ID CHOOSE NOT TO BUY IT. However if another chooses to invest at X dollars per acre, its their NOT my decision. Just because I wouldn't pay x dollars per acre doesn't mean one who does shouldn't have that free choice. Being a free market capitalist instead of any form of a socialist, I have no problem with some dude who chooses to make a profit by selling the farm or one who chooses to buy it I DONT WANT BIG BROTHER DICATING FARM PRICES, let the free market set the prices instead. What I have now is due in large part to my buying and farming then selling farms for a profit over many years IF THAT MAKES ME A BAD PERSON THEN SO BE IT, GET OVER IT....

Soooooooooooo since I'm free to buy or not to buy and others are free to buy or sell at whatever their price, I'm sure NOT complaining about farm land prices. Whats the alternative??? Government sets the prices??? Its like if you cant stand the heat best get out of the kitchen lol. Id bet a person who says land prices are too high might think otherwise when its his turn to sell AND BETTER NOT LET ANYONE TRY AND PREVENT HIM FROM SELLING AT X DOLLARS PER ACRE THEN !!!!!!!!!!!!!!!

John T Conservative free market kinda guy, TO EACH THEIR OWN if land is too high in my opinion I wont buy, but if others choose to that's THEIR OWN decision
 
Really, when haven't land prices been crazy?
I can remember when people thought it was crazy to pay $1,000/Acre for flat, well-drained, top soil depth to China land in Iowa. Like they say, they aren't making any more of it.

Larry
 
That's part of it. There is a lot of gamesmanship with the programs that are not in the spirit of the rules. A couple of fellows were caught not too long ago being signed up for payments in more than one county for the same ground. It took a while as these guys farmed in more than one county but the auditors caught up with them. They should be in jail but they are not to my knowledge (don't know them personally). With the crop insurance some of these farmers have elaborate partnerships so if the insurance basis gets pounded on a certain parcel it rotates to a different operator but who is part of the same partnership. The net result is a parcel gets reset to the county average which may well be on the high side versus the actual production. Rinse and repeat.
 
Agreed. I was talking to my BIL a while back. He was talking about his farm that he bought in 1979. He paid $350 an acre and his neighbors told him he was nuts. The 80 next to him just sold for $11,650 an acre at a live auction. There were still 4 bidders at $9000 an acre and it went to two after it hit $10,000 an acre.
 
You must be fairly close to me cause that's our problem as well any where from 15- 22000 an acre. But they have to have it for their nutrient management. Almost all are NEW Canadians from Europe.
 
What else can you invest money in that is any safer at 70 other than land. I would guess that it will go up over the next fifty years at the same pace as long as they print money to pay the country's interest on the debt.
 
I live in a valley that has the better soils in the area. All flat and underlaid with gravel, very little tile needed. Old dairy farm of 150 ares evenly split 75 acres on both sides of my road sold just about a year ago now. One side had decent house and a few sheds, other side had run down barns rest tillable other than fence rows. Brought just shy of 10K per acre by two different local farmers.
 
Right.

A local retired doctor, and longtime friend, recently appeared before our County Board of Commissioners and complained at length about the real estate taxes he had to pay on farm land he owns.

For one thing, he was complaining to the wrong people. He should have been complaining to our State Senator. The State Legislature sets the taxes and all we Commissioners do is operate within the parameters that are set for us.

In the interest of maintaining a friendship, I stopped short of telling him this is a free country, and if he finds it so distasteful to pay real estate taxes, he can always sell the land and put his money into something else.
 
In the dairy buyout back in the 80s,you weren't supposed to start milking again for five years,if memory serves me right. One place here started right back up again. It went from a father son operation to a son father operation.
 
Back in the 1960's you could buy all the farm land you wanted in my area for $100-200 per acre...It actually cash flowed...Now its $3000-4000 per acre and doesn't even come close to cash flowing..The only way you can buy the 80 acres next to you is to own 1000 acres free and clear or have a fantastic town job....Every year less and less people can afford to buy farm ground..
 
JD I know where you're coming from. It's happened a couple times in the family. Farmed it for so many years then sold out from under with hardly a chance to buy it. It's these guys with 10,000 plus acres trying to get the last dollar. In my book that's called greed.

I can never figure it out. Some guys with all this land pay top dollar per acre buying it, then have the latest and greatest equipment, and pay top dollar for land they rent. And on top of that since they have so much land they have to start planting early as possibly so they can get everything planted. Get a late freeze and they end up replanting. Then when it's a bad year in the fall they don't get all their crops out anyway.

Now look at grain prices and something doesn't quite add up here.....
 
Are you talking the US govt? And dairy farmers are getting rich, working 7 days a week, with milk at about $16 per cwt?
 
JDSeller-

I can relate, it must be tough to see it go, since you've been taking care of it all these years.

I've been looking at small 40 acre parcels to buy myself, but land prices keep going up every year. It sure is frustrating for the buyer, but great for the sellers.
 
You have to be a good manager and being willing to look at alternative methods. When i started it was as you said marry or inherit it was the time of get big or get out.My dad nor any of his family backed me an aunt helped and strangers .I got the home farm by blackmailing my dad he then went to the bank and told them to sell me out you would not want to now the cost and even to this day i still pay because of that lack of support. So how did i make it no wife no family ? The biggest thing i learned was how to take advice from older farmers and respect them for what they done .The main financial thing was its not how much you make its what you spend have just what you need and take care of it few times that i had more than one tractor most times they were smaller than the neighbors chore tractor when i started i had two farms and a forty horse tractor. Niche marketing was second option i farmed sustainable leaning on the organic. There is still a lot of guys starting its going to be a tough road and I'm willing to help anyone.
Thats one advantage of having a better renter i now have more money and time to help startup farmers
 
What?
Did you forget about heavily subsidized Federal Crop Insurance??
And other lucrative Fed Govt Programs?
 
What are you saying? You didn't have the heavily subsidized Federal Crop Insurance???
Yields per acre really make no difference if you are subsidized!!!
Cmore
 
I have been on all sides of the land deal over my years as a farmer, renter and land owner and it has never( OK seldom) been an easy or simple equation to owning land in my experience. People with the $$ or equity always have and always will have an advantage over those who are starting up and borrowing 100%. I didnt own one acre when I was actively farming, it never penciled out for me. But long after I quit to work full time in town I bought a farm at a time when farming was bad and interest was high. I had 1/2 of the money sitting in the bank to put down. Renting the tillable land made the payments and taxes and put a few bucks in my pocket each year. Now 25 years later it has proven out to be the smartest financial move I ever made due to 1000% increase in value but it would have seldom cash flowed from farming or renting it IF I had financed 100% of the purchase except for the the big profit times of a couple years ago. 120 ares adjacent to me was for sale over the winter and I told my youngest son that if I had his youth, his money and my knowledge that I would buy it in a heart beat. He hesitated,,,, it sold.
 
We could all learn something from this particular situation. Making improvements to rented land is always risky without a sound written lease agreement. Things that we have no control over can change. Do I always follow my own advice?--Of course not!
 
Maybe you are jealous because the two farmers in their 70' s apparently have more money than you do???
 
I can find quality stocks that pay more than 4% in dividend yield. They may or may not have more risk than farmland when it comes to losing value in the current market. They also don't require upkeep (like the farmhouse), tenant issues, real estate taxes, etc.

Farmland has had a tremendous run in the past 10 years. There is nothing on the horizon (with the exception of wierd winter weather which could lead to a questionable growing season) to say that run can be sustained. From an investor standpoint, it would make sense to pull the plug, although a year or so ago would have been more of a peak. From what it sounds like, their trust prevented them from doing it then.

Don't blame them. It was their land, and their money. Last I knew, you were a free market guy. Don't waste your time on "sour grapes." If you feel that bad about it, be ready for the next one.
 

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