What will happen to farmland values in 2022?

You probably don’t need us to tell you that 2021 was a stellar year for the value of ag land in the United States. To summarize with a single statistic, the average dollar per acre value of cropland rose $320 over the previous year, according to the USDA. That’s nearly 8%, and the largest yearly increase since 2013. Not to mention that the USDA released their report in August, and by all accounts the numbers have only continued to climb since then. Now, we’re left to speculate if farmland values in 2022 will see similar growth.

The near future is fairly predictable …

The strong competition for farmland assets in 2021, driven by relatively few farms for sale and increased interest, is likely to continue into the coming months. So it’s a fairly safe bet that the first part of 2022 won’t deviate much from its predecessor.

… but 2022 on the whole is hard to foresee

A webinar held recently by the University of Illinois regarding the farmland market polled attendees about farmland prices in 2022.

Over 90% of attendees said they expect farm prices to rise by 5% or more. But despite this overwhelming optimism, experts point out it wouldn’t take much for values to actually decrease instead. Of particular concern are rising interest rates. A 1.5% or 2% hike in 2022 is quite possible. If that were to combine with a substantial drop in commodity prices, just maintaining the current land values would become a challenge.

Ebb and flow in the land market is hardly new, we’ve seen plenty of it historically. However, we have never seen prices escalate to this level. Some wonder how high prices will soar and if we may be experiencing the peak. Others feel that there is a shortage of land available for sale and that other factors are contributing to buyer motivation such as the stock market, commodity prices, and buyers’ desire to move to non-populated areas.

If the status quo persists, the outlook is positive

To summarize, the core factors that sent 2021 land values skyrocketing were:

  • High demand
  • Relatively low supply
  • Low interest rates
  • High crop prices

As long as all of these factors remain in place in 2022, stable or increasing land values are a reasonable bet.

Get top-tier valuation with Agri-Access

Keeping an eye on farmland values in 2022, Agri-Access appraisers are ready to assist with your next land purchase. Always prepared to offer top-tier valuation services, Agri-Access encourages lending partners, landowners and farm operators to reach out to an appraiser in their region any time!

Let’s discuss how we can expand your ag lending power.