Great article from Nebraska TV
Forget the lottery, instant millionaires are made in Nebraska’s fertile soil.
While the nation recovers from the collapse of the housing market, farm land is about as sure a bet as there is.
An auctioneer’s voice is the sound of prosperity in Nebraska, as farm land soars past $10,000 an acre.
“It’s been a good upwards market for sellers,” auctioneer Randy Ruhter said.
It’s a great time to sell, but it’s not easy for a beginning farmer like John Williamson. He attended this auction in Hastings with his step dad.
John said, “I’m trying to get started with the help of my dad here,”
“My stepson is located right beside the farm. Come into the farm operation and we had hopes
he could have the farm beside him,” Richard Heftie explained.
This auction progressed quickly. The number of potential buyers narrowed to two, as bidding climbed higher and higher. John and Richard never had a chance.
John said, “It takes a lot of capital to get in and that’s what kept us out of this I guess.”
Randy Ruhter stopped the auction not once but twice, giving bidders a chance to work the phones.
An acre of irrigated land went for less than a thousand dollars when Ruhter got in the business. Now it trades for ten times that.
“Land is just a good investment,” Ruhter explained. “It was residual income, unlike something you might buy, stocks and bonds. While you’re holding the property and possibly getting an upturn in value, you’re also getting annual income off it as well, so it’s very desirable, ag real estate right now seems to be the choice.”
The statistics back up that assertion. University of Nebraska economists say 2011 brought record incomes on the farm.
The latest study of agricultural real estate by the University of Nebraska shows farm land jumped 22% from 2010 to 2011. Not only is that an all-time high, it’s still the record once inflation is factored in.
University research shows central and south central Nebraska farms rose in value by 25% in a single year.
In south central Nebraska, land prices rose 103% in five years. Statewide, land with center pivot irrigation showed the greatest gains.
Randy Ruhter expects a market correction, but doesn’t think it’s necessarily a bubble that will burst. And as long as it lasts, corn belt states like Nebraska enjoy good times.
Ruhter said, “As agriculture goes, so goes central Nebraska’s economy. It’s all based on what farmers make and farmers, historically, if they’re making money, they’re spending money.”
Ruhter was auctioning 160 acres of gravity irrigated crop land near Harvard in Clay County. The final price came to $12,000 an acre.
John Williamson calculated the prices on his phone, which ended up at $1.9 million.
The landowner became an instant millionaire, while most farmers like Williamson were outbid
before they started.
“It passed us faster than we thought,” he said with a laugh.
Based on high crop prices, farm income is at an all time high in Nebraska. But there’s a downside for the men and women feeding the world.
Williamson, the young farmer said, “It might be tough to own for a while. Might have to rent until things change.”
His step dad Richard Heftie said, “It’s unbelievable and the next thin is what will taxes do?”
NTV will examine the issue of property taxes Tuesday as our week-long special report continues.
Read More at Nebraska TV