In recent years, farm real estate (land and structures) has typically accounted for about four-fifths of the total value of U.S. farm assets. (See more on farm assets and debt, including real estate.) Farmland values have leveled off since 2014 after a long period of appreciation following the farm crisis of the 1980s. Although growth in farm real estate values has been relatively flat since 2014, many regions continue to experience modest year-over-year increases. USDA's Economic Research Service (ERS) research examines trends in farmland values, and assesses the effects of both macroeconomic (interest rates, prices of alternative investments) and parcel-specific (e.g., soil quality, Government payments, proximity to urban areas) drivers of farmland values. Research findings indicate that, in general, the substantial growth in land values since 2000 was attributable to general economic factors (e.g., low interest rates) in addition to expected farm earnings. Recent research (see Farmland Values, Land Ownership, and Returns to Farmland, 2000-2016, February 2018) also suggests that the effects of changes in farmland values have different effects on farmers who own, versus rent, the land in their operation. For example, landowners increase their real-estate-secured debt and land purchases during periods of rising farmland values. Renters, in contrast, typically see higher rent expenses as land values appreciate, which increase operating costs and potentially reduce their ability to expand production. In addition to farm earnings, historically low interest rates contribute to the farm sector's current ability to support higher land values. In 2018, average U.S. farm real estate values remained high, reaching $3,140/acre (a modest 0.1 percent decline in real terms compared to 2017). The resilience in average farm real estate values has persisted, despite recent declines in sector-level farm income that followed a record high in 2013. (See the data product on Farm Income and Wealth Statistics.)
Regional variation in farm real estate values is significant, owing to general economic conditions, differences in the health of local farm economies, policy, and location-specific characteristics that affect the returns to farmland. In the Corn Belt, farm real estate values were over twice the national per-acre average in 2018, while values in the Mountain region were less than half the national average. Individual regions have also experienced different trends in appreciation in per-acre farm real estate values. Over 2017-18, real estate values in the Southern Plains ($2,220), Pacific ($5,550), and Corn Belt ($6,430) regions appreciated the most in inflation-adjusted terms (6.1, 1.2, and 0.6 percent, respectively). In contrast, farm real estate values in the Northern Plains region continued their recent downward trend, with a decline of 3.4 percent (to $2,170/acre). The Southeast and Lake States regions also experienced declines of over 2 percent over 2017-18.
Farmland values also vary by land use. In 2017-18, national average cropland value declined slightly to $4,130/acre (a 1.1 percent decline in inflation-adjusted terms), while pastureland value ($1,390/acre) increased 0.9 percent. Cropland has historically maintained a substantial land value premium over pastureland due to the higher per-acre returns associated with crop production. Although cropland values are at least as high as pastureland values in each farm production region, considerable variation exists across the United States in the magnitude of the cropland/pastureland value disparity. For instance, in the Southeast, average per-acre cropland and pastureland values are equivalent ($3,990/acre). In contrast, cropland values in the Pacific region ($6,780/acre) are more than four times higher than pastureland values ($1,650/acre).
Annual farmland rents measure the value of using land for agricultural production in the current year. Over 2017-18, average national cropland rents remained relatively constant (declining by 0.6 percent), while pastureland rents declined by 2 percent. The Southern Plains had the largest increase in cropland rents (3.1 percent), while the Southeast experienced a 3.2 percent decline. Notable pastureland rent increases occurred in the Pacific (2.2 percent) and Corn Belt (1.9 percent) regions, contrasting with relatively large declines in the Northern Plains (4.3 percent) and Mountain (3.9 percent) regions.
For ERS research that examines the factors contributing to recent and past patterns and trends in land values, see:
- Farmland Values, Land Ownership, and Returns to Farmland, 2000-2016 (February 2018).
- Trends in U.S. Farmland Values and Ownership (February 2012).
|Region||Farm real estate value||Cropland value||Cropland rent||Pasture value||Pasture rent|
|U.S. total (48 States)||3,140||4,130||138||1,390||12.5|
|Source: Land Values, 2018 Summary, USDA, National Agricultural Statistics Service, August 2018.
Annual data by region and State are available from QuickStats.
Links to key farmland value data sources:
- Historical data on selected statistics on farm real estate, 1950-95, by State.
- Historical data on average gross cash rents and rent to value rates, 1960-94, by State.
- Recent data on land value and rent through NASS' QuickStats.