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North Central Illinois Farmland Values

Hindsight is 20/20, or was 2020 full of haze?  It goes without saying the COVID-19 pandemic brought a cloud of uncertainty. Reflecting back on farmland values and lease trends for 2020, stability and positivity shine through for the North Central Illinois Region of Livingston, McLean, Mason, Tazewell, Woodford, Marshall, and Putnam Counties. This region is unique with a variety of soils, crops and locational influences, which can lead to great ranges in value from one end of the region to the other.

2020 started off with a clear picture, first quarter auctions were active and bringing stable values compared to the previous year; land leases were being renewed with minimal adjustments; and spring planting went fairly smoothly. During the last two weeks of the first quarter, haze started to set in with the COVID-19 pandemic. At this point in time, quick adjustments were made to any remaining spring auctions. Many of them were moved to an online platform and the results were nothing but normal or even higher than expected.  Fortunately, COVID-19 hit at a time that naturally slows for real estate transactions.

As a result of the pandemic, the Federal Reserve drastically cut interest rates, commodity prices strengthened, and multiple stimulus programs were put into place adding an additional income source. The coupling of low interest rates and favorable income streams left land values on a positive note for the closing of 2020. Third and fourth quarter auctions continued to be the avenue for optimal pricing. In addition, properties that were broker listed were generally on the market for a very short amount of time. Overall sales volume for 2020, however, was down compared to the previous year.

Stepping into 2021

There continues to be a high demand for farmland with limited supply. A volatile stock market has investors moving funds into different asset classes, with farmland being one of the top choices.  Investors are not alone, many farmers are weighing their options for land purchases as well.

Quarter 1 of 2021 auction sales continue to follow the upward trend left at the close of Q4 2020. Buyers being both farmers and investors alike. The Land Values summary for 2020 indicated the upper end of the range for Cropland A to be $12,000 and Cropland B at $10,000. In March alone, new levels were established for both Cropland A & B Farms.

Over this same time period in 2020, the average $/P.I. for Cropland A & B farms was $72/ P.I. The results of these March auctions indicate the $/P.I. range to be $95 to $105 dollars per Productivity Index point. This is an approximate 45% increase from the previous 2020 values.

Quarters 2 & 3 of 2020 had a lower volume of land sales, but play a pivotal role for what we can forecast for Fall & Winter auction season. The Federal Interest Rates remain unchanged as of the latest vote on March 17, 2021. FOMC acknowledged the economy is showing signs of recovery, but employment rates are still a large concern. Will there be a Department of Agriculture stimulus package for 2021? It is hard to be certain, but many industry professions are leaning towards the positive side. If economic factors for 2021 play out similar to 2020, I think it is fair to say land values are trending up and will continue to climb to new levels.

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