Wisconsin Land Values Remain Strong
Thursday, June 25th, 2020 -- 9:08 AM
(Wisconsin Ag Connection) -Wisconsin land values remained strong over the past five years despite difficult economic conditions and substantial losses in the number of dairy farms.The Wisconsin Agricultural Land Prices Report, issues by the University of Wisconsin-Madison Division of Extension, provides a statewide overview of agricultural land values/prices across Wisconsin based on a statistical analysis of more than 8,000 actual sales from 2009-2019. The data looks at township level data, land values versus rental rates, influencing factors, and implications for agriculture. Between 2014 and 2019, the average annual growth in Wisconsin agricultural land value was 1.8 percent. Adding those capital gains to a rental income of about 3.25 percent would give landowners an average annual return on investment of 5.05 percent. Given that farmland is a low-risk investment, this return compares advantageously to other investments such as low-risk corporate bonds which averaged 3.75% over that period. During the time period of this study, the vast majority of landowners, even those forced to exit dairy, were not necessarily forced to sell their land. Most could continue cropping or rent the land, thus limiting the supply of land on the market and help supporting market values.
Signs of a weakening demand have appeared in 2019, and things may not improve in 2020 given the high level of uncertainty surrounding commodity price projections. The lower interest rates and various financial help packages offered by the government provide hope for land values to remain steady in 2020. As of June 1, 2020, the data for the first quarter of 2020 indicated stable land prices and did not show any negative impact from the COVID-19 crisis. The Wisconsin Land Values report offers an interactive map that shows estimated 2019 agricultural land values at the township level based on the analysis of almost 9,000 real estate transactions between 2009 and 2019. The model used to generate those estimates for cropland values takes into account the location, year, and the mixture of land uses of each transaction.
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