U.S. farmland values are positioned for growth in 2025 with more buyers in today’s market than sellers, according to a report from agricultural real estate services provider Farmers National Company.
FNC said demand is outstripping land availability, which is set to drive a strong market this year despite factors that typically would detract buyers from obtaining farmland, including lower net farm income, volatile market prices and higher interest rates.
Much of the demand can be explained due to farm operators’ motivation to expand their operations onto lands near their existing enterprises in anticipation of an upbeat economy, according to Paul Schadegg, FNC’s senior vice president of real estate operations.
“Often this land has not changed hands for generations and once sold, may not be sold again,” Schadegg said in a statement.
He also noted increased activity from land investors looking to expand their portfolios in productive regions that fit their investment criteria.
Domestic farm real estate values have been on a strong growth trajectory since 2020, increasing 32% over the past five years, according to the U.S. Department of Agriculture. Some University of Illinois researchers had expected land values to decline with last year’s downturn in the economy potentially slowing buyer activity.
Lower supply of available farmland, however, has kept values high. Across the industry, FNC said its land listings are down about 25% compared to between 2020 to 2023, following an active fall selling season that has spilled over into the new year.
Farmer sentiment has also skyrocketed following the election results with many expecting a more favorable tax and regulatory environment with the new administration, according to Purdue University’s Ag Economy Barometer, a measure of the health of the U.S. farm economy.
“Optimism remains moving into 2025, and with positive signals for the ag economy, opportunity will exist for those involved in agriculture production,” Schadegg said.