Land Values Across the U.S.– Highlight on North Dakota

Generally speaking, supply has been in balance with demand, which has been a major factor in sustaining values.
( AgPro )

Values across most of North Dakota are holding firm and even showing slight increases in some areas, especially for good quality land. This comes as a surprise to some, given the current publicity regarding financial challenges facing farmers in light of commodity tariffs and the trade war with China.


Two Forces Drive Value

Land quality factors and location have been critical indicators for land values in most areas of the state. Properties that have less appealing characteristics have shown softening values in many cases.

Some of these factors can include drainage, salinity, soil productivity ratings or severance and access issues. In recent years, the land market has generally become more localized and influenced by buyers from a much smaller radius than in the “boom years” of 2012 to 2014.

Therefore, conservative or aggressive tendencies of neighborhoods can accentuate the strengthening or weakening trends in a given area. Investors are a factor, but generally, this group is not driving the farmland market. They tend to be more of a factor in parts of the Red River Valley in the far eastern part of the state where higher cash rental rates and higher value crops, such as sugar beets and dry edible beans, are prevalent.

Progressing west through the state, investor influence tends to be driven more by recreational factors or local ties.


Ground For Livestock Mostly Steadies

Pasture values appear to be relatively stable after seeing declines from the peak in 2015. In some areas, value continues to be influenced by recreational pursuits. Recreational influences have been relatively stable for the past 10 years or so and are mostly a minor segment of the market.

Portions of the far eastern part of the state have seen a declining number of livestock producers in recent years. In these areas, pasture values are highly dependent on the ability to convert acreage to cropland.


Irrigation Does Not Guarantee Higher Value

There is some irrigated cropland within the state. It’s located in rather small geographic areas. This creates limited demand as we have noticed that dryland crop farmers tend to be reluctant to venture into the world of irrigation. Irrigated land suitable for potatoes has tended to achieve a premium, but other irrigated land in the state can lag behind in relation to values for top-quality dryland
in those areas.

The installation of subsurface drain tile continues to increase, mostly in the eastern one-third of the state. Installation tends to be on owner-operated land, and there are only sporadic sales of tiled land in any given area.

In most cases, we have not seen sales of tiled land surpass values of top-quality land in that area that does not have drain tile.


Increased Supply Late In 2018

In the fall months of 2018, there was a significant amount of land for sale on the market in North Dakota—but not enough in any one area to overcome demand. Generally speaking, supply has been in balance with demand, which has been a major factor in sustaining values.


For More regional and State Reports

Read updates on land values from a dozen ASFMRA members.