Farmland values across the central Corn Belt rose slightly in 2017, according to a quarterly survey conducted by the Federal Reserve Bank of Chicago. The boost halts three years of declines in farmland values. The bank serves the northern two thirds of Illinois and Indiana, all of Iowa, the lower peninsula of Michigan and southeastern Wisconsin.
Percent Annual Change in District Farmland Values
The district saw an annual increase of 1% in “good” farmland values for 2017, bucking the trend of annual declines suffered over the previous three years. With farmland values up slightly for 2017, the district avoided exceeding the three consecutive years of declines seen in 1984–86. In the fourth quarter of 2017, Indiana, Iowa, and Wisconsin had year-over-year increases in agricultural land values, while Illinois had a decrease. In addition, there were indications that Michigan experienced a year-over-year decline in farmland values for that quarter (however, too few bankers responded to report a numerical change). The district's ’s agricultural land values were overall the same in the fourth quarter of 2017 as in the third quarter; Wisconsin was the only District state with a quarterly increase in its agricultural land values.
After adjusting for inflation, the district actually experienced an annual decrease of 1% in farmland values for 2017. While this was the fourth annual real decline in a row for district farmland values, in the 1980s there were seven consecutive years of real declines for such values. In real terms, there has been a 10% correction in the district’s farmland values from their peak in 2013 to the end of 2017. Even so, the index of inflation-adjusted farmland values for the district was 58% higher in 2017 than at its previous peak in 1979.
Real Versus Nominal Farmland Values
The vast majority of responding bankers (76%) expected farmland values to be stable in the first quarter of 2018, while 23% expected them to decline and only 1% expected them to rise. So, more of the same is likely for District agricultural land values in early 2018, the bank states.