WILLMAR, Minn. -- The value of tillable farmland in Minnesota continues to rise in the region, although some county assessors are seeing signs suggesting the market might be ready to cool down.
Recently distributed property tax notices have already informed most landowners that values are up once again, continuing a trend that took off in earnest in 2008.
The assessed value for 2014 on tillable land rose by approximately 10 percent or more in most area counties, including Renville County, which typically sets the pace.
Renville County saw its largest increase in 2013, when the per-acre value of tillable land ranged from $4,822 to $10,014, according to information from County Assessor Barb Trochlil.
The 2014 assessment range is $5,140 to $14,190 per acre. There were 67 sales evaluated, indicative of a strong market. The assessments are based on sales from October 2012 to Sept. 30, 2013.
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Other counties in the area have yet to crack the $10,000-per-acre mark, but they are coming close. Assessor Val Skor, Kandiyohi County, reported that the county's 2014 tillable land values range from $3,354 to just more than $9,000 an acre.
Land values to the west are not as high.
Change coming
The report shows some of the first indications of a possible change in the ag market are coming, according to Connie Erickson, Yellow Medicine County assessor.
Erickson points out that since October, her office has seen several land auctions where no sales occurred because the sellers were not offered the prices they anticipated.
She also notes that agricultural land values rose by 255 percent in the past six years, including a 36 percent jump in 2013. This last year's increase was only 10 percent.
Assessor Bonnie Crosby, of Chippewa County, says sales records also seem to suggest values are not rising as rapidly as in previous years.
Nonetheless, other counties continue to see steady and relatively large increases. In Lac qui Parle County, land values rose 20 percent in the latest assessment, with a range for 2014 of $4,131 to $7,489, according to assessor Lori Schwendemann.
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Swift County is seeing steady jumps, as well. From 2013 to '14, the average for tillable acres rose from $4,420 to $5,730 per acre, reports Wayne Knutson, county assessor.
Swift County saw 39 sales for 5,378 acres in the time period evaluated for 2013 assessments. In the period for the current 2014 assessments, it saw 29 sales for 2,540 acres.
Swift County has seen more activity than would be expected because of the Minnesota Farm Co. It owns several thousand acres in the western part of the county, and has been marketing the properties.
The company's land sales have greatly complicated the task of assessing values in the county. Knutson says there have been surprising variations in the prices at which land sold in recent sales.
No matter the variations in values per acre, all of the counties in the area have seen major increases in farmland values since 2008, while residential and commercial property values have remained largely unchanged.
The result is a major increase in the tax capacity of the counties, along with a shift of the overall burden to agriculture. Erickson reported that in Yellow Medicine County, the tax base has risen from $1.4 billion to $3.2 billion, with agriculture representing $2.8 billion of the total.
Swift County added nearly $500 million in value last year alone from the rising value of farmland, Knutson notes.
