The following was written by Bradley Company's Todd Dickard
Farmland moving out of agricultural production is referred to as transitional land, and our marketplace has many examples of this product category and perhaps more importantly, the potential for this development.
Each year the Purdue University Agricultural Economics Report, typically published during summer, provides insight and hard data on Indiana farmland values, including numbers on transitional land. It should be of no surprise that average and median transitional land prices around the state increased dramatically five to 10 years ago when crop prices soared, along with farm production ground prices. In recent years, those increases have turned south with declining crop price.
In 2016, Purdue reported that the median transitional acre in Indiana was $10,000 per acre. Keep in mind that the number swings wildly, depending on location. For example, transitional land in parts of Hamilton County, due to demand, is likely much higher than transitional land in most other parts of the state.
The median Indiana per acre transitional value in 2012 was $8,000.
It’s important for buyers and sellers of land that is in transition and or has potential for transition to be extremely careful and to be cognizant of government leadership and plans for growth. How will a community’s investment in both land-use planning and zoning and ultimately its investment in infrastructure impact the value of a subject parcel? Buyers of transitional farmland who plan to hold for lengthy periods of time need to accurately anticipate the future for planned commercial or residential use, new zoning, the potential for infrastructure improvement and market demand for new land use applications.
Often, the answers to these questions are not-so-obvious and can be somewhat speculative. Members of the Bradley Land Group, a team of five brokerage professionals, can assist you in the evaluation of a particular market’s growth projection and the associated value of a specific piece of real estate. For more information, contact Senior Associate Broker Todd Dickard at 219-608-4773.