We have been getting calls and talking with people who are asking how the Covid-19 pandemic and financial market gyrations are affecting land prices.
They wonder if there will be a flood of land sold or if prices will drop. Or, those who were contemplating selling ag land might decide to hold onto the land in light of the uncertainties. Or will land defy all the current negative challenges in the world and maintain strength? Bottom line, it is too soon to tell.
Over the past few years, land values have defied the weakness of net farm income to plateau at a historically higher value only off somewhat from the 2013 peak in the land market. This was due to the lower supply of land for sale and historically low interest rates among other reasons. Land values also normally react counter cyclical to the stock market and for quite awhile, stocks were on a huge up move.
Right now, there are too many uncertainties that have to play out before we have a clearer picture of the economic and financial impacts on agriculture and land values. How long will Covid-19 impact our everyday lives and businesses? How long will oil and commodity prices be down? Will the basics of the long-term trends in agriculture and land values continue to hold true in the “new normal”?
Right now, the winter/spring land sale season is winding down as it usually does as everyone turns to spring planting. Recent auctions have been affected by crowd size limitations and Farmers National Company agents are offering multiple alternative bidding mechanisms to carry on the sale as best suits the seller client and the situation. The land market is functioning in a mostly normal fashion despite the ever-changing challenges all around. Stay tuned to see what happens over the course of the next months and years.