Archive for Saturday, February 8, 2014

Douglas County farmland values buck statewide trend downward

February 8, 2014


With commodity prices falling, farmland value has fallen with them in much of Kansas. But the unusual market for real estate in Douglas County has largely shielded it from the trend.

In January average sales prices for an acre of high-quality farmland in Kansas dropped 10 percent from what they were in January 2013, according to a survey from Farmers National Company, a farm management firm with real estate and insurance services.

In Kansas, land went for $4,500 per-acre on average in January, compared to $5,000 last year, according to the survey. Several other heavily agricultural states saw price drops as well, including Nebraska, where prices per acre fell by $1,000.

That's a shift from the past decade. From 2004 to 2013 farm real estate values nearly doubled, according to the USDA's National Agricultural Statistics Service. The rise in land prices followed record market prices for corn and soybeans, driven by international demand and biofuels production. But those prices started to fall in 2013, and land values in many places have fallen with them.

Bill Wood, director of the Douglas County extension office, said that recent droughts in western Kansas have also affected prices in the region. "They've taken a worse hit," he said.

The same pattern hasn't held in Douglas County, where the weather and demographics make for a different market. With more rainfall in this part of the state, farmers have seen good wheat, corn and soybean crops, which have helped keep land prices strong.

"Overall most of our farmers were pretty happy," Wood said. "I haven't heard from anyone who's felt land was dropping."

Perhaps even more important than the weather, competition from industry and residential landowners keeps real estate demand in the county generally high compared to its rural counterparts elsewhere in Kansas. "Where we're at here, we've got enough other types of investors that keep land pretty competitive," Wood said.

"Douglas County is a wonderful county to live in. Lots of people want to live here," said Michael Flory, of realty firm Flory Associates. All those people wanting to live in the county keep demand for land high. Flory has seen farmland prices in Douglas County rise over the past two years, and hasn't noticed any drop recently, he said.

Many are attracted to the university and Lawrence's shopping, golf courses and other amenities, as well as the ability to live the country life outside of town, Flory said. In recent years he's seen more folks who "would like to have a small piece of land so they can grow their own produce," he said.


Richard Heckler 4 years, 1 month ago

This may not be so hot overall. As I see it the more land prices are inflated the more property taxes are also inflated. This does not make me feel good.

Will a financial institution loan money at $5000 per acre for unimproved property? While real estate executives ask $35,000 per home lot?

Home buyers should be very careful about how much they are willing to pay regardless of their wealth. It is odd to realize the wealthy are the ones promoting inflation in the real estate industry. Nothing frugal nor fiscal conservative about that mentality.

It is risky business for home buyers to get sucked into the "Lawrence Frenzy". Do home buyers realize owing more than property is actually worth can be a real live possibility when paying inflated values? It can come back to haunt homeowners should the GOP pull off a third home loan scam that sends the economy down the tubes. Many in Lawrence,Kansas have yet to recover.

Inflation as an industry is NEVER healthy for any economy. I tag these economies as "boom town" economies. "Boom" always crash sooner or later. BUYERS BEWARE!!!

I DO NOT want these "Boom Town White Collars" inflating my property value because I am interested in paying higher property taxes to support their foolishness.

Bee Farms 4 years, 1 month ago

good points, yet LAND is still the only thing they can't "manufacture" -- you can make more Fords and Chevys and iPOD -- but you cannot make more LAND. it's still WAY undervalued compared to other assets --- it's illiquid market - farmland - but worth it's weight in gold. The tax issue is another matter and i agree 100% with you there. $25000 dollars for a HOME LOT (to build a house on) doesn't sound at all unreasonable to me - because you get all the infrastructure in town to go with it. But the taxes are too high . Neither does $5000 per acre for farmland --- in fact it sounds very reasonable to me. the Taxes point is very well put. WHY tax farmland at all??? they don't hardly use any city services.

Richard Heckler 4 years, 1 month ago

Inflation is a reckless economic policy.

One might be able to sell a home lot for $100,000 to some buyer however that does not make all lots worth $100,000 therefore a lot must be assessed at what it might bring at rural farmland value of around $1,000 per acre.

Builders and speculators are not about to pay a farmer $25,000 per one eighth acre sized home lot. However in all fairness builders and speculators should be offering the family farm families no less than $100,000 per acre. 8 homes on one acre of land could bring $1,600,000 or more.

Tax Assessed Value and Market Value are two very different animals so when the powers that be decide Market Value should be assessed Value for sake of increasing taxes that is unacceptable. Market Value is all over the place therefore an an unreasonable approach. Under Reagan,Bush and Bush market values went straight to hell.

Not only that who wants to pay taxes based on market values or an assumed market value which is based on speculation.

Jeff Kilgore 4 years, 1 month ago

Ben, I won't dispute these--figures $4,500 and $5,000 per acre, but I can tell you that I don't know a single seller in Jefferson County, the NW county adjacent to Douglas, who has sold land for much more than $3,000 and this area is equally desirable.

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