Farm real estate markets remained relatively stable in the fourth quarter of 2017, according to the Kansas City Fed’s quarterly Survey of Agricultural Credit Conditions.
In the Federal Reserve Tenth District, including Colorado, Kansas, Nebraska, Oklahoma, Wyoming and parts of Missouri and New Mexico, values for all types of farmland declined only three percent from a year ago. Prior to the fourth quarter, farmland values had declined at an annual pace of five to seven percent, but those declines appear to have slowed more recently.
The KC Fed says stability in farmland values was due, in part, to fewer sales. For the fifth straight year, a majority of bankers reported a decline in the volume of farmland sold. Looking ahead, a significant number of bankers expect values to remain steady in 2018. The report says fewer bankers expect farm income to decline in coming months, suggesting that economic conditions may continue to stabilize.
Still, ongoing demand for financing amid a low income environment and slightly higher interest rates suggests that credit risks in the farm sector will remain a focus for 2018.