According to the LANDTHINK Pulse results, most people expect the land market momentum to continue throughout the year. Last month’s survey question revealed that 36.1% of our audience expected to see a slight increase in land values in 2020. Amid an obstinately booming economy under President Trump as we head into another election year, we are still hearing rumblings in the media of a 2020 recession and another financial crisis. Based on the results of last month’s survey, most people do not see a recession on the horizon. The economy is in very good shape right now; unemployment rates are near a half-century low and job creation is solid. The overall health of the economy plays a major role in the value of real estate. Employment growth, increased income, and high consumer confidence levels are expected to drive demand for land.
Last month, the January Pulse asked: What do you think will happen to land values in 2020?
January Pulse Sponsored by
There’s been a prevailing depressed mood in agriculture, but steady farmland values have stood out as a bright spot. Despite downward pressures like trade uncertainties and reduced farm income, farmland values have held steady or increased slightly, with the exception of segments such as dairy (where farmers have been exiting at higher-than-usual rates).
In 2019, paltry farmland inventory coupled with adequate demand for productive cropland kept land prices stable. Government support programs and demand by farmers for additional land supported steady agricultural land values. More than a third of U.S. farm income in 2019 came from the U.S. government in the form of the trade-war bailout (called the Market Facilitation Program), crop-insurance payouts and other conservation and program funding.
What does 2020 have in store for farmland values? There are indicators that farmland values will hold steady or slightly increase, as predicted by the LANDTHINK audience. Today’s low mortgage rates are expected to continue in 2020, and U.S. Secretary of Agriculture Sonny Perdue has said the Phase One agreement with China should mean that further MFP payments to farmers and ranchers won’t be necessary. The administration expects the agreement will bring enough fiscal benefit to the agriculture community in 2020 to curb the need for supplementing farmers’ income. Perdue has indicated that the Trump administration will begin working with China on Phase Two of its trade deal as it also enters into discussions with countries such as India and in the European Union.
Interest also continues to grow for alternative crops like hemp, and farmers’ decisions around investments in non-traditional crops, will impact profitability in 2020. Hemp cultivation is surging across the U.S and abroad, and farmers who have never grown hemp before are rushing to plant it- eager to cash in on the growing demand and high profits. Farmers who are struggling to stay financially afloat are looking toward alternative niche crops to boost revenue.
The LANDTHINK audience certainly had a strong opinion on what 2020 has in store for the land market. The results showed some mixed views, but the majority of our audience (36.1%) believed that land values would Slightly Increase, followed closely by 27.8% who believed land values would Remain Steady throughout 2020. Many (20.9%) hold the opinion that land values will Significantly Increase. Only 9.8% disagreed, expecting land values to Slightly Decrease and a scant 5.3% thought land values would Significantly Decrease.
We were pleased with the large number of Pulse responses, and we thank everyone who answered the Pulse and shared it on social media with friends and connections in the land industry. LANDTHINK would like to extend a big thank you to American Forest Management for sponsoring the January Pulse and for coming up with a very interesting question to pose to our audience. American Forest Management has been helping landowners manage, sell, buy, improve, and enjoy millions of acres of land for over 50 years.
Become a Pulse sponsor! It’s a great way to ensure your brokerage is the first one buyers and sellers call when they have a need to buy or sell property. You’ll get insane exposure on Social + Email + Web. That’s 500,000+ monthly eyes on you! Once you have it, you won’t want to give it up! Pulse sponsorships are offered on a first come first served basis and are subject to certain limitations. If your business would be interested in sponsoring a Pulse question, please contact us soon.
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We want to know what you think about our February Pulse question, chosen and sponsored by Southeastern Land Group. Which THREE details are most helpful to you when viewing land listings online? Answer now.
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