Sep 16, 2024

Stable national land prices reported

National land values reported stable with regional shifts creating new opportunities, risks

A new report reveals that while national land prices have remained stable, significant fluctuations in key regions, such as a sharp rise in Florida and notable declines in California and Louisiana, highlight new opportunities and risks for land investors, brokers and developers.

The trends, driven by shifts in commodity pricing and investor behavior, particularly affect farmland in California and Louisiana, where agribusinesses and regional landowners face emerging challenges and opportunities in response to changing market demands, according to a Sept. 10 report by National Land Realty (NLR).

The report draws from NLR’s network of more than 400 agents and brokers in 48 states to provide a year-to-date analysis of Q1 and Q2 agricultural land sales for 2024. The data demonstrates stability in the national aggregate for average price per acre (PPA), while highlighting notable trends within outliers like Louisiana, Florida and California, according to a news release.

National Aggregate

The data shows the average PPA across the country remained relatively stable, increasing by only about 5% nationally. This comes in the wake of significant farmland appreciation over the past few years, with many parts of the country seeing record prices for farmland in 2023.

“Land prices have remained high in spite of increased input costs and interest rates, indicating significant demand across the country for irrigated and available farmland. This is largely due to massive consumer demand for produce, meat, dairy, and feed,” Ronnie Richardson, NLR’s CEO, said in the release. “While further increases are unlikely for the moment, I believe these values will remain strong for the foreseeable future — barring extensive drought, natural disasters, or an industry-shaking event akin to the COVID-19 pandemic.”

According to NLR’s figures, California, Oregon and Louisiana experienced land sale drops of more than $10.000. Most of the Southeastern states, except for Florida and Tennessee, saw drops of less than $10.000.

Florida and Nevada witnessed land sale increases of more than $10,000 while other states, including Washington, Idaho, Arizona, Texas, Wisconsin, Michigan, Maryland and Maine, realized hikes exceeding

California

Data revealed that California’s average PPA dropped by $12,226 over the past year — a significant 27% decline. This decrease is likely driven by a combination of high interest rates and low commodity prices for popular crops like almonds and walnuts. Since prices are relatively high in California overall, percentage-based factors like tax or interest-rate hikes hit the California market harder than they do other states.

“Reports of an exodus from California real estate have little implications for the agricultural market, which remains generally unaffected by geopolitics. Taxes and interest rates are far more likely to influence the market,” Richardson said in the release.

“We do have a couple of large institutional investors looking to exit the California farmland market, but there are no buyers thus far. They may need to adjust their prices to match demand if they are serious about liquidating. With the average price per acre already down, I’d recommend watching the market closely and holding off on purchases for now.”

Florida

In Florida, the average PPA surged by $24,000 from 2023 to 2024, reflecting a remarkable 118% increase. This significant rise is driven primarily by the soaring demand for land in the state over the past year. Florida remains one of the top destinations for people moving to different states, meaning this demand for available land in Florida isn’t likely to change anytime soon.

“It’s the same issue here: supply and demand,” Richardson said in the release. “Even though the price per acre is up, I would still recommend buying land in Florida as demand continues to rise. I would focus on transitional properties in particular as more people continue to move into the state. The key to Florida is simple: demand is driving everything.”

Louisiana

According to NLR, the data found that the average price per acre in Louisiana decreased by $10,866, primarily due to some of the larger landowners beginning to divest themselves of some farmland holdings.

Based in Greenville, South Carolina, NLR, one of the nation’s fastest-growing land brokerage firm specializing in farm, ranch, country estates, timber, recreational and commercial development properties, has released its latest data on land sales across the U.S. Established in 2007, NLR operates more than 80 offices across 48 states.