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Published February 03, 2012, 04:16 PM

N.D., RRV land values up double digits — again

FARGO, N.D. — North Dakota farm land values increased an average of 14 percent in 2011, according to an annual survey of appraisers and other real estate professionals. That figure is especially impressive because it is the second year of double-digit increases.

By: Mikkel Pates, Agweek

FARGO, N.D. — North Dakota farm land values increased an average of 14 percent in 2011, according to an annual survey of appraisers and other real estate professionals. That figure is especially impressive because it is the second year of double-digit increases.

The 14 percent increase of 2011 prices over 2010 prices comes on the heels of a 20 percent increase from 2010 over 2009, said Charles P. Peterson, vice president of farm management for US Bank in Fargo, who compiles the statistics for the North Dakota Chapter of the American Society of Farm Managers and Rural Appraisers.

The Red River Valley, with 12 counties or partial counties in Minnesota and North Dakota, saw on average a 10 percent increase on the year, following a 22 percent increase in the same period the previous year, according to the survey.

Peterson acknowledged there can be a wide gap between the range of prices in Red River Valley border counties, identified by east- and west-county designations, and in the case of Cavalier County, north and south. “The gap is narrowing,” he said.

Farmers themselves seem to be the strongest bidders in land deals, Peterson said. “I’m seeing the next generation coming into farming. Farming has been very lucrative and Dad is retiring. There are low interest rates, with the opportunity to forgo paying high cash rents on rented land. They’re taking that cash rent and putting it toward interest payments. I talked to a young farmer (recently) who qualified for the ‘Young Farmer’ program with the U.S. Department of Agriculture. He was able to borrow money for 2 to 3 percent interest for a 30-year program. You have low interest rates now, and good commodity prices. It’s a supply-and-demand issue.”

Peterson said in some counties the price ranges reported in the survey can be heavily affected by that “one unique sale” where land has come up for sale across the road from someone’s farm. Ten years ago one of the strongest bidder categories was the outside investors. “Today, it’s more the farmer that’s purchasing some of this property,” although there still are investors looking for diversification — land value appreciation and the cash rent.

Details from the survey:

12 counties/part counties in the Red River Valley increased an average of 36 percent.

In the northern valley, west Marshall County, Minn., increased by 42 percent, with sales ranging from $1,800 an acre to $4,600, after a 22 percent increase the previous year. That compares to increases in west Polk, Pembina and Walsh of 13 or 14 percent, but top prices posted at $4,750 in west Polk to $5,672 per acre in Walsh County.

West Kittson County in Minnesota showed the only decline on the year for the northern Red River Valley — a 2 percent reduction to a range of $1,500 to $2,800 per acre, but after a 26 percent increase the previous year.

In the southern Red River Valley, price increases were topped by Clay County, up 14 percent in a range of $2,000 to $5,054 an acre, after a 24 percent increase in 2010. Meanwhile, Richland County showed a 2 percent decline, but with a range of $1,605 to $5,140 per acre, and after a 23 percent increase the previous year.

17 counties/partial counties (Kittson to Ottertail) surveyed in Minnesota outside the Red River Valley increased by an average of 52 percent.

Among the largest increases were in eastern Kittson County, where values increased by 81 percent on the year, with land values shooting to $600 to $2,300 in 2011, up from $600 to $1,000 an acre in 2010. Other non-valley counties with big increases were west Becker, 61 percent ($1,500 to $3,800 per acre range); Pennington, 48 percent ($600 to $2,288 per acre range); east Clay, 45 percent ($1,800 to $4,075 per acre range); and east Marshall, 44 percent ($600 to $2,000 range).

In 56 North Dakota counties/part counties outside the Red River Valley, values increased by an average of 36 percent, according to the survey. (The survey designates the north-south areas by Interstate Highway 94, while the east-west regions are roughly divided by the Missouri River. Regional data:

12 counties/part counties in northeast North Dakota increased 50 percent.

Biggest increases were in southern Cavalier County, a whopping 63 percent increase to an average of $1,400 to $2,200 per acre. Northern Cavalier County increased by 22 percent on the year, but in the range of $1,400 to $2,200 per acre. Eddy County increased by 51 percent to a range of $700 to $2,500 an acre.

12 counties in southeast North Dakota increased by 43 percent.

Western Cass prices increased 61 percent, to a range of $1,200 to $5,720 per acre in the year, and after a 30 percent increase the previous year. Barnes County prices increased 55 percent, to a range of $800 to $4,300, after a 16 percent increase in 2010. The smallest increase in the area was Stutsman County, with a range of $650 to $2,600 and an average 2 percent increase, following a 19 percent increase from 2010.

12 counties in northwest North Dakota increased 48 percent.

The biggest percentage increase was in Mountrail County, up 70 percent with a range of $500 to $2,300, and following a 14 percent increase the previous year. Bottineau County was up 33 percent with a range of $550 to $2,100, and following a 25 percent increase the previous year. The smallest increase was 2 percent in McKenzie County, with a range of $400 to $700, and following a 2 percent increase the previous year.

14 counties in southwest North Dakota increased by 53 percent.

Slope County values increased 81 percent, with values reported from $700 to $1,650 an acre, and following no change in value in 2010. Golden Valley County values shot up 63 percent on the year, but in a range of $700 to $1,050 an acre, and following a 6 percent decline in 2010. Bowman County reported the top sale in the area, at $1,700, and an average increase of 57 percent on the year, following a 25 percent increase in 2010.

The North Dakota Chapter of the American Society of Farm Managers and Rural Appraisers has 59 members in North Dakota. Most are accredited rural appraisers, farm managers, real property review appraisers, or members of the Appraisal Institute, or are surveyed. Thirty-four of the society members contributed to the report. Cooperating members use actual figures for land sales, collected when they attend land sales and when they collect comparable value research for land at courthouses, Peterson said.

Peterson compiled the figures and uses the simple mean average between the range of prices for a particular county or partial county. The figures are not weighted for the number of acres in a transaction, and don’t reflect the time of year the deal occurred. Individual sales, however, are only counted once.

For details on the survey, go to http://sections.grandforksherald.com/agweek/editorial/ASFMRA-%20Land%20value%20and%20rents%20survey-2011.xls.

The charts compare land values dating back to 2008, as well as rental and pasture value and rental rates, as available.

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