Land sales activity has been basically flat the past few years sitting at transaction levels slightly lower than normal. The lower supply of farms for sale has been one of the factors that supported land values after the 2013 peak in prices paid for ag land. At Farmers National Company, we are starting to see the glimpses for increased land sale activity through to the end of 2021.
There are several reasons that there may be more farms sold than we have recently seen as we move into the fall and early winter sales season. Farmers National Company and its agents have already been receiving an increased number of calls from landowners who are thinking about selling later in the year.
The main reason that will drive the current and upcoming sales decisions is that landowners are seeing a large and rapid run up in land prices to levels that we last saw in 2013. Family groups, estates, trusts, and recent inheritors of land will give much more thought to capturing the higher land prices now in order to divide the cash among multiple owners. Some may have missed selling in 2013 or 2014 and now see an opportunity to sell farmland if they still want to.
The other big reason that there might be more sales activity this fall is that a market doesn’t like uncertainty and the questions and views on the minds of sellers and buyers in the marketplace will drive market movement. An example comes from last fall and the small uptick in land sales at that time driven by the uncertainty surrounding the US presidential election.
People made decisions to sell their land based on what they expected for future outcomes and actions. Today’s land market is looking at the uncertainty of what future tax policies will be and what if any effect there would be on the individuals selling land now in the much higher price environment that we are currently in.
Landowners who are considering a sale of their land are factoring in both the higher land prices and the uncertainty of future tax policy among the myriad of other factors to make the call whether to sell now or keep the land. Time will sift out whether land prices stabilize at these levels or continue upward depending on where commodity prices and interest rates go over the next several years. The other uncertainties will play out over time too and give some answers to those who need to act accordingly.
But, due to all the above, there will likely be an uptick in land sales activity during the balance of 2021.