Expert Insights: From the Desk of Max Steffes
March 2024
Land Market Update Recap & Forward-Looking
Last year, Steffes Auctioneers conducted over 500 auction sales in 18 states. Over 7,500 pieces of construction equipment, 1,400 tractors, 1,200 trucks, hundreds of combines, and 26,000 acres of land all traded hands through our auction sales. As always, doing what we do gives us a particular perspective and insight into what is happening in those areas.
Like many, we began 2023 with a bewilderment of sorts, trying to figure out how things could be so hot. Land prices were at record levels, and equipment prices weren’t far behind. Indeed, something had to give, and the markets would correct during the latter half of the year. While we did see some adjustments in pricing, we ended the year with a similar attitude in certain areas.
There was still a healthy and strong appetite for both land and equipment, especially when it comes to “the good stuff,” i.e., high-quality farmland or low-hour, well-maintained equipment, which has almost always been the case during the last few decades.
December brought with it substantial dealership activity at auction sales. For the second December in a row, we sold the highest-priced piece of used farm equipment at auction—a used combine for $621,000! For historical reference, and according to data compiled by our friend Machinery Pete, the highest-priced used combine sold at auction ten years ago was $340,000. Twenty years ago? Try $140,000 for a like-new 2002 John Deere 9750 that we sold in Wabasso, MN. Things have certainly changed, haven’t they?
So, did things correct last year? Well, kind of. We noticed less interest and hesitation from bidders in some regions of the land market. In the Dakotas and Minnesota, we noticed a post-harvest bump in land prices spurred by optimism from a good crop and outstanding sugar beet payment. On the equipment side, where supply increased, prices adjusted. This was the case for most harvest equipment and MFWD tractors, which seemed to be widely available late in the year. With that all said, there were some new records on the land and equipment side of things.
Looking Ahead
That was last year. This year, of course, brings a whole new set of challenges. An opportunity to bid on new jobs, grow a new crop, or buy another farm. Also, it is an election year, which always makes things interesting, especially in the environment we are in now. Politics aside, and for whatever reason, election years have been good for both the equity markets and land markets. The chart provided here illustrates this.
For Iowa Farmland values, which have always been a benchmark for the greater Midwest, values have only gone down two times out of the last ten presidential election cycles. So, there is an 80% chance, based on these statistics, that we’ll have a flat or up year. It's hard for me to believe when you look at the commodity board, interest rates, and the yield prospects for this year! For equity markets (S&P 500), the prospects are even better if you study history. Since the 1960 presidential election, the market has only gone down two times: once during the dot-com bust and once during the 2008 mortgage crisis.
So, buckle up, 2024 will be an interesting one!
Time will tell!
Max Steffes | Director of Real Estate
