By TIM ALEXANDER
Illinois Correspondent

DANVILLE, Ill. — A mid-year snapshot of rural real estate trends reveals farmland values are continuing to slide in parts of Illinois, according to the Illinois Society of Professional Farm Managers and Rural Appraisers (ISPFMRA).

In addition, the results of a survey issued by ISPFMRA indicate Illinois landowners and buyers are pessimistic regarding a rebound in farmland values during the second half of 2009. The organization’s study, issued twice yearly, showed that while overall farmland values are down across the state, pockets have held steady or increased slightly in value.

“In Region Five (which includes Danville) I’d have to say (values) are a little softer,” said Bob Swires, past president and current chairman of the land values committee for ISPFMRA. “But I could go to a specific area of Region Five and make the case that land values in the area remain steady or are up a percent or two.”
Excellent quality farmland values declined by $171 per acre, or 2.3 percent from the last six months of 2008, to $7,200 per acre. Fair quality land dipped to $4,000 per acre, a decline of 5.4 percent.
“We’ve seen the good and the fair land come up a little faster than the excellent category (land),” said Swires, “so we’re not surprised to see it soften off a little bit faster.”

Swires said farm real estate market trends show increased local buyers and that available farmland is mostly being purchased by current farmers.

“The predominate buyers (60 percent) are now farmers, not necessarily investors. We had a lot of 1031 (land exchange) money in the past, but now that the farmers are the predominate buyers, purchases are more location-sensitive,” said Swires.

Those 1031 exchanges have become virtually nonexistent “because no land is selling for development in suburban areas” and because of other factors, according to Swires.

Estate sales made up the biggest share (41 percent) of all farmland sales from January-June 2009. Swires said respondents to the survey of land managers, appraisers and real estate agents indicated they expect further declines in farmland prices over the next year, while 33 percent expect prices to remain at current levels.

In a continuation of a trend from the second half of 2008, fewer pieces of land are for sale than in recent years, the survey revealed.

“The volume of land changing hands across the board continues to decline,” commented Swires. “Potential sellers are finding (farmland) is a good investment after all and are hanging on to their land.”

The survey showed ISPFMRA members project cash rents to be down 10-15 percent. “I think that’s just reflective of the big drop in the grain market,” Swires explained. “Rents are not set until October, and who knows what will develop by then?”

Trends may already be shifting, Swires concluded, noting that in the last 90 days more pure investors – people who are adding farmland to their investment portfolios – are buying farmland.

The next report on farmland values from the ISPFMRA will be in January 2010.