A new USDA study reveals that the average value of Illinois farm real estate was at its highest level in history in 2004, said a University of Illinois Extension farm management specialist.
"The average farm real estate value for Illinois in 2004 was $2,610/acre, the highest on record," says Dale Lattz. "This includes the value of all land and buildings."
The information came from the USDA's National Agricultural Statistics Service which releases every year an estimated average of farm real estate values and cash rents by states. The estimates are based on surveys of farmers from selected geographical areas.
"These surveys follow strict statistical guidelines," says Lattz. "Estimated values may be revised the following year based on additional information. Revisions may also be made based on data from the five-year Census of Agriculture."
Lattz noted that values released in 2004 included downward revisions for the 1999 through 2003 time period based on the 2002 Census of Agriculture data.
"The 2004 Illinois farm real estate value figure was 7.4% higher than the 2003 revised average of $2,430/acre," he says. "The 2004 percentage increase was the highest since a 7.6% increase in 1998."
In Illinois, farm real estate values have show a year over year increase every year since 1988, or 17 consecutive years.
"Since 2000, farm real estate values in Illinois have increased 15%," he says.
In the years since 1970, average farm real estate values have declined only five times as compared to the previous year. Those years were 1982, 1983, 1985, 1986 and 1987.
"There have been three years when farm real estate values increased over 20% –1974, 1976 and 1977," Lattz adds. "The largest increase was in 1977 when values rose 37.3%."
A steady upward increase in farm real estate values has been the pattern since 1995.
"The largest increase during that time was a 9% increase recorded in 1995," he says. "The smallest was a 1.3% increase in 2001."
Driving the steady rise in value, Lattz says have been low interest rates, low returns on alternative investments, and continued use of farmland for developmental purposes.
"These factors seem to have a bigger influence on farmland values than the actual earnings from farm land," he says.
A full copy of the report is available online at farmdoc at: http://www.farmdoc.uiuc.edu/manage/newsletters/fefo04_13/fefo04_13.html .