Creighton University has released their latest Farmland-Price Index, and as predicted by me and other observers of the farmland market, values have continued on an upward trend, for the 26th consecutive month. Strong consumer demand and continued low interest rates are thought to be fueling the rise.
Nebraska farmland prices have reached an average $2,410 per acre – up an astonishing 31% from a year ago. That’s the largest uptick in year to year price in the 34 years that the academics have been collecting the data. Other states have posted similar trends, if not similarly outsized returns. Unsurprisingly, investors have been entering the market in increasing numbers; one major Illinois land broker reports that non-farmer investor involvement jumped from 66% of sales in 2010 to 73% in 2011.
Finally, bankers are also showing confidence in the continued strength of the sector. The Confidence Index, a metric that follows bankers’ expectations for rural economic performance over the next six months, rose to 63 in March of 2012, a bump from 60.3 in February. The most pessimistic analysts I am hearing from are predicting slowing and plateauing of growth; nobody is expecting prices to go down. It continues to be a great time to be involved in the rural economy.