Nebraska Real Estate Value Hits Record

Nebraska’s average farm real estate value rose 21 percent over the past year, hitting $3,750 per acre (including the value of buildings), a record high according to the USDA National Agricultural Statistics Service (NASS). The previous high was $3,120 set in 2014. Nebraska’s growth was only exceeded by Kansas (25.2 percent) and Iowa (21.4 percent). Farm real estate values nationwide grew 12.4 percent with an average per acre value of $3,800. Rhode Island has the nation’s highest average per acre value at $17,500. The estimated values are based on surveys of farmers.

Figure 1. Nebraska Average Farm Real Estate Value ($/Acre)

Figure 2. Farm Real Estate Value, Percent Change from 2021

Nebraska’s average cropland value of $6,000 per acre was up 21 percent from 2021 and came on the heels of a 14 percent increase last year. Dryland crop ground increased 20 percent, equaling $4,800 per acre. The value of irrigated land rose just over 22 percent, swelling to $7,950 per acre. Pastureland lagged crop ground but still posted an increase of just under 15 percent, growing to $1,240 per acre.

This year’s increase is not unusual. Figure 3 plots the percentage changes in average land values between 1971-2022. A few things stand out. First, land values are more likely to increase than decrease. In 36 of 52 years, 69 percent of the time, land values rose. Second, annual increases were likely to exceed 10 percent. Upturns of at least 10 percent occurred in 21 years, 40 percent of the time. Additionally, values grew by more than 20 percent in 7 years. Years with downturns in values occur, but rarely are the declines large. Only 4 percent of the time, 2 of 52 years, did values decrease by more than 10 percent.

Figure 3. Average Percentage Change in Nebraska Real Estate Value

The USDA data echoes recent figures from the University of Nebraska-Lincoln (UNL) and the Federal Reserve Bank of Kansas City. UNL’s most recent survey found land values were up 16 percent on average compared to the prior year. A Federal Reserve Bank of Kansas City first quarter survey of commercial bankers found land values were up roughly 20 percent in the Tenth District which includes Nebraska. Higher commodity prices, greater returns for crop producers, and higher cattle prices have been lending support to cropland and pasture values. Double-digit growth in values, though, is not likely to continue. Rising input costs, lower returns, higher interest rates, and drought will weigh on the market. With these headwinds, it’s difficult to foresee continued sizable growth in market values.