The number of U.S. farmland sales and the value of U.S. ag land that was sold both rose last year, a new national survey finds.

But neither farmland values nor ag land sales rose much as overall land sales or land values, according to the annual survey released recently by the Realtors Land Institute and the National Association of Realtors.

The survey, which measured the 12-month period ending in September 2017, found that the value of all U.S. land rose 3 percent, led by a 5 percent increase in residential land.

In contrast, the value of irrigated agricultural land rose by 2 percent and the value of non-irrigated ag land rose by 1 percent in the same period. The survey attributes the ag increases "to commodity prices (which) generally stabilized from late 2016 to early 2017 after slumping since 2014."

Residential land sales rose 5 percent from September 2016 to September 2017, with commercial land sales rising 4 percent.

In contrast, sales of both irrigated ag land and non-irrigated ag land both rose 2 percent in the period.

"With flat commodity prices making the growth in ag land sales modest compared to residential and commercial land sales, it's encouraging to see the market as a whole still continue to strengthen," Jimmy Settle, national president of the Realtors Land Institute, said in a written statement.

The survey, which had more than 800 respondents, projects that U.S. ag land values will rise 1 percent from September 2017 to September 2018. In contrast, overall land values are estimated to rise 3 percent, with residential and commercial land each projected to rise 4 percent.

The survey's projected increase in 2018 ag land values - and the increase in land values from September 2016 to September 2017 - would appear to be at odds with anecdotal reports that poor crop prices put continued downward pressure on Upper Midwest farmland values and rental rates.

But lower input costs, high yields and continued low interest rates have helped to support farmland values and rental rates, at least in Minnesota, Terri Jensen, an Accredited Land Consultant who owns and operates MN Land Real Estate & Auction in Northfield, Minn., and the 2015 national president of the Realtors Land Institute, a Chicago-based professional organization, told Agweek.

Two other things to consider:

Ag economists and ag bankers sometimes say that farmland rental rates are "sticky," which means that rental rates don't rise as fast or as much as farmland values. So the current upturn in farmland values seen in the Realtors Land Institute survey may not be reflected immediately - or ever - in rental rates.

Ag officials also say the Upper Midwest often lags national trends.

To see the full Realtors Land Institute survey:

Agweek's Feb. 19 cover story will be the magazine's annual look at farmland rental rate trends in the Upper Midwest.


'Unknowns are key'

Predicting the direction of farmland values and rental rates is notoriously tricky. They're influenced by weather, yields, crop prices and interest rates, among other impossible-to-know-in-advance factors.

But Terri Jensen takes a knowledgeable stab about predicting what's ahead. An Accredited Land Consultant who owns and operates MN Land Real Estate & Auction in Northfield, Minn. she's the 2015 national president of the Realtors Land Institute, a professional organization.

"Unknowns are key in moving forward and may lead to fewer sales in 2018," she said.

This is her list of uncertainties:

• High surplus of corn and soybeans.

• Unknowns in regard to the 2018 farm bill.

• Immigration reform.

• 2018 tax reforms and their potential impact on ag.

What Jensen called interest rates "bumps" is another unknown, and potentially the biggest influence on farmland values and rental rates.

"Low interest rates and high yields have kept land rents steady," she said. "A change in interest rates/availability of money may impact rents and, subsequently, land values."