|
South central kansas |
I should have said capitalization rates on farmland.
Brent A. Gloy
With commodity prices tumbling one of the key supports for sky high farmland values is changing rapidly. As economic returns in the farm sector fall, we should expect that the other key driver of high farmland prices, low interest rates, will come into much greater focus. Even with elevated profitability of recent years, capitalization rates on farmland have steadily drifted lower, meaning that the ratio of current income to farmland prices has fallen. In other words, farmland prices have grown more rapidly than current income. While this has made sense in a growing income and falling interest rate environment, this trend may be approaching its limit.
| |
|
|
Farm Income and Land
