Farmland values across Illinois were ‘steady-to-up” last year while the number of sales throughout the state appear to have been down significantly from 2022, according to the 2024 Farmland Values Lease Trends Report conducted by the Illinois Society of Professional Farm Managers and Rural Appraisers. The comments came from Luke Worrell, AFM, ALC, chair of the Farmland Values Conference project sponsored by the Society.
Worrell, with Worrell Land Services, Jacksonville IL, says 2023 was a transition year for farmland values across the state. “For the first time in a long time, we saw quite a bit of variance across the regions,” he states, citing sales of Class A Excellent farmland: “Regions 3 and 8 (western Illinois and St. Louis region) experienced continued sharp increases while Regions 1 (northeast) and 6 (central) decreased, something that hadn’t occurred in a few years.
The Land Values Report is based upon sales transaction analyses done by members of the Illinois Society based upon publicly recorded sales activity. The information is based upon 10 geographic regions across the state. The data are compiled through the office of Bruce Sherrick, Ph.D., University of Illinois Department of Ag and Consumer Economics. “The other big change from the last couple of years is the number of transactions,” he continues. “For much of 2021 and 2022, the land market moved at a breakneck pace in auctions and private transactions. We were spoiled in the sense there seemed to be a Class A land auction on a weekly basis. That changed dramatically in 2023. The velocity of closed transactions slowed considerably. Values largely maintained themselves or slightly increased, but the number of sales happening throughout the state appear to have been down considerably from the prior year.”
In a synopsis of sales activity for 2023, Gary Schnitkey, Ph.D., and Gerald Mashange, Ph.D., both with the University of Illinois Department of Ag and Consumer Economics, noted estate sales represented the majority of farmland sales, accounting for 59%. Farmers were 19% of sellers, of which 13% were retired and 6% were active. Institutions accounted for 9% of the sellers, and individuals represented 12%.
Farmers were 59% of all buyers, with 57% being local farmers and 2% relocating farmers. Individual investors who would not farm the land were the next largest group, accounting for 30% of buyers, with local investors 17% of the buyers and non-local investors 13%. Institutions accounted for 6%of all buyers.
Median sales prices for 2023 paid per acre by land class were: Excellent -- $16,779; Good -- $12,911: Average -- $9,198; Fair -- $7,000; Recreational -- $5,250; Transitional -- $35,000. Quoting Worrell, “It’s all location, location and location.”
Price change averages (2023 vs 2022) by land class were: Excellent -- + 5.5%; Good -- + 7.0%; Average -- + 13.3%; Fair -- +14.4%; Recreational -- + 7.1%; Transitional -- + 22.0%.
2024 Prospects
According to Schnitkey and Mashange, “Most respondents expect farmland prices to remain the same or decline in 2024, with only 4% expecting farmland prices to increase. In total, 32% expect farmland prices to remain the same, while 64% expect prices to decline. Almost half (49%) expect a decline of less than 5%, whereas 13% expect a decline between 5% and 10%. Only 2% expect a decline of more than 10%.
Rental Rates
For Excellent quality farmland, traditional crop shares in 2023 averaged an income of $350 per acre, cash rents averaged $350 per acre, and custom farming averaged $370 per acre. Custom farming resulted in the highest return among these arrangements. Average cash rent levels decreased slightly from 2023 to 2024 for all land productivity classes. For Excellent productivity farmland, the $400 per-acre cash rent for 2024 was $12 lower than the $412 per-acre cash rent in 2023.