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Illinois land survey prophetic: Price tops $15,000 per acre
Illinois Correspondent

FORSYTH, Ill. — As Ken Aupperle prepared his presentation for the 2013 Illinois Land Values Conference, to be March 13-14 in Bloomington, an interesting bit of news reached him: A 173-acre farm had been auctioned in Champaign County for $15,375 an acre, a record high for the region.

The news confirmed what Aupperle – president of the realty company Heartland Ag Group, Ltd. – was preparing to share with the 70-plus members of the Illinois Society of Professional Farm Managers & Rural Appraisers (ISPFMRA): Farmland values in Illinois will continue to rise.

“We had a survey of our membership, and our membership said that farmland values will rise between 5 and 10 percent in 2013. They said to look for rising values this year and, to take it one step further, they’re looking for the five-year trend to be positive,” said Aupperle, who served as chair for the 2013 Illinois Land Values Conference.

It was where the ISPFMRA’s 2012 Statewide Land Values and Lease Trends Report was unveiled on March 14. The report showed farmland values in Illinois had expanded their double-digit annual increase through 2012, Aupperle said.

“Our excellent-quality farmland went up 21 percent in 2012,” he said. “That was the third year of double-digit increases, totaling 65 percent over the past three years. The average price was just a touch under $13,000 per acre for prime farmland across the state.”
Lesser quality of farmland across Illinois – good, average, fair – enjoyed increases of 16-17 percent in the same time period, the report indicated. Though Aupperle won’t predict what the ceiling may be for farmland values in Illinois, ISPFMRA members anticipate a return to “normal” increases in values beginning this year, according to its recent agent poll.

“Farmland is what it earns, and so our members are saying the earning stream should be steady in the next five years, or maybe rising a little bit,” Aupperle said.

“The normal underlying increase in prime Illinois farmland is 6.5 percent a year over the last 40 years. Our members see us returning to that 5 to 7 percent increase as we go forward, not the big surge of 65 percent in three years.”

The historic surge in demand for Illinois farmland is being led by the farmers themselves, Aupperle explained.

“The farming community is flush with money, flush with cash. Our survey showed that last year, the farmers bought approximately 70 percent of the available land,” he said. “This is the highest percentage purchased by farmers in recent decades. They are reinvesting in their business by buying land and are optimistic about the future.”

Other buyers of Illinois farmland in 2012 included local investors (6 percent) and non-local investors (14 percent). Sellers included estate sales (58 percent), individual investors (15 percent) and retired farmers (14 percent). Reasons for selling included estate sales (59 percent) and fair prices (26 percent), according to the Report.

A breakdown of farmland values per region showed Region 4 (north-central Illinois) as possessing the highest valued mid-range quality land, at $12,700 per acre. Regions 8, 9 and 10 in the southern tip of the state averaged $11,400 per acre, while Region 5 in eastern Illinois averaged “only” $10,000 per acre. This is largely because of landowners who were hesitant to put farms on the market due to of alternative investment opportunities, according to the report.

One alternative investment opportunity farmers are enjoying is in mineral rights, according to Aupperle. “Illinois is experiencing an energy boom. Farmland owners across the state are becoming sensitive to the prospect of coal, oil (and) natural gas under their properties, which drives the value of the property and income from it.”

But the talk of the conference, and of realtors selling rural property across Illinois, was the recent auction of Champaign County farmland for $15,375 an acre. That sale was one in a recent cluster of regionally historic farmland sales that included property in Christian County ($15,800 an acre), Shelby County ($14,500) and McLean County ($14,550).

“We’ve blown away the $13,000-an-acre barrier. (The market) is like popcorn popping right now,” Aupperle observed.