Iowa Public Television

 

Land Values Rise

posted on December 28, 2001


As the long and difficult year closes, most of the nation's financial community is going through the motions. Stock indices finished the week higher, but the lack of volume suggests there is little conviction in the higher price levels. Still there are glimmers of recovery. Orders for new cars, computers and other big ticket items indicate consumers are returning to form, aided in great part by a succession of interest rate cuts that have pushed borrowing costs to their lowest level in thirty six years.

The effect of lower interest rates is not lost on rural America, nor on its largest industry. But the reports from the country signal the ground beneath the rural economy may be shifting.

 

Land Values Rise

Farm values in the heartland continued to rise, despite tepid market prospects for most of the commodities grown there. A survey of 408 banks in the seventh federal reserve district shows the value of "good" farmland climbed 5 percent in the past year. Much of that growth is attributable to lower interest rates, the continued availability of government farm subsidies, and non-farmer investors who see farmland as a haven for their money at a time when the nation's economy is under performing.

While farmland is seen as a desirable investment, It may not signal a broad confidence in the farm economy. The district's bankers report lower demand for non-real estate loans, but anticipate an increase in demand for operating loans, a reflection of higher cash rents due to rising farmland prices. Notably, the bankers anticipate a sharp decline in loans for new machinery purchases.

 


Tags: agriculture news real estate