Land Market Trends in Southeastern Minnesota
Farmland buyers everywhere are facing multiple headwinds in 2024, from high interest rates to softened crop prices, which may affect land values and buyer purchasing power. The situation is no different in Southeastern Minnesota, reports Compeer certified general appraiser Nick Reps, who has overseen the region for nearly a decade.
“Land in Southeastern Minnesota is diverse and desirable,” explains Nick. “I work with territory from Rochester all the way down to Austin, and then all the way over to the Mississippi River. We cover flat cropland areas for grain and hog farming, as well as bluff country and contour strips for dairy and other livestock.”
Land prices are up as much as 60% since 2020
“Since the COVID era (around 2020 until now) land prices have gone up from 40% to 60% in this region,” Nick reports. “This includes a range of land types and purposes, including cropland and recreational property.”
Luckily for potential land buyers, the farmland market in Southeastern Minnesota seems to have started stabilizing in recent months, both in terms of volume and value. Nick reports that he hasn’t seen any unexpectedly high sale prices above valuation that would indicate an ultra-hot market.
“During COVID, we saw much more of an investor influence,” Nick adds. “But more recently it’s been farmers who show up at the auctions and bid for properties.” Less outside competition and a return to local buyers and sellers may provide yet more evidence of a stabilized land market in Southeastern Minnesota.
“Although it’s always tough to predict market turns,” Nick says, adding that there probably isn’t enough data yet to make a confident forecast of what will happen to land values and sales volume this year.
Tighter budgets may impact purchasing power
Farm operators may find themselves balancing a range of considerations this year as they look to make investments in new farmland. High loan interest rates are top of mind for any buyers who plan to finance their land purchase.
“It’s yet to be seen if interest rates are deterring buyers,” Nick says. “Interest rates are currently higher than they’ve been in recent years, but so far it seems that buyers have had the cash reserves to keep up with higher financing costs.”
Crop budgets are another important consideration, with margins getting squeezed and some crop prices (such as corn and soybeans) softening. Again, Nick has not noticed a direct impact of crop prices on land values and sales, but notes that it’s an important factor to monitor.
Farmers are also looking to make investments in technology and automation, which may impact how much budget they have available for land purchases. “Dairy technology, including robotic milking systems, is especially on the forefront for producers,” Nick notes. “New technologies have really helped farmers address labor issues and bridge shifts as farms move from one generation to the next.”
It’s important to work with local experts
So, with all the unknowns regarding the farmland market this year, what is Nick’s top advice for land buyers and sellers who are considering making a move?
“I strongly recommend working with someone who specializes in the ag world and ag real estate, whether that’s a Compeer appraiser or Compeer loan officer,” Nick explains. “These folks will help you understand what factors will make a difference in your buying and selling decisions, so you can feel confident every step of the way.”
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