Strong Farmland Auction Prices Continue
Mike Walsten from the “Your Precious Land” has posted recently that farmland sold at auctions are still enjoying high prices.
Mike also was interviewed on Ag Day last week and one of his interesting comments related to the trend of farmers in the metro Chicago area. When pricing for development land was very high during the mid 2000’s, these farmers were able to sell their farm land for upwards of $15,000 an acre and then reinvest it tax-deferred under Section 1031 of the Internal Revenue Code. They mostly reinvested in three or four times the land located in more rural areas.
Now, with the drying up of development potential, many of these farmers are now going back to the people they sold their land to for maybe $20,000 an acre and re-purchasing it for $5,000 to $7,500. I think you will see this trend continue for a couple of more years. Then, when the development trend starts again (and based upon a growing population, it will start again sometime), these same farmers might be able to sell the land for $20,000 an acre or more again.
It seems like some of the best investors over the last decade have been our farmers. It has been a long-time since we could say that.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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