Each year GreenStone Farm Credit Services compiles market data along with customer data to determine annual benchmark land values to be used in completing accurate and current appraisals. The varying agricultural land uses, as well as recreational land and home sites, and commercial and industrial developments, require values to be determined on a localized level. This benchmark analysis, conducted by GreenStone’s internal audit team, continues the appraisals first reported in 2006. Regions reflected in the report cover the entire state of Michigan and northeast Wisconsin.
This year’s report found prices for good farmland remained relatively stable throughout the territory, with a few outliers in high value areas. The year-over-year change in values ranged from a 7.5 percent decrease in the northern thumb of Michigan to 6.3 percent increase in southwest Michigan. Land used for recreational purposes in northern Michigan saw a 12.5 percent increase in value.
The benchmark study includes several traditional row crop parcels across the Lower Peninsula of Michigan and northeast Wisconsin. Values are determined for 80-acre parcels.
“The continuing trend in our territory is that good quality farmland prices remain remarkably steady. Demand for land is still dependent largely on location. If it is next to a farm with a capacity to expand, it will sell with little negotiation for price,” says Joe Hickey, vice president and chief appraiser with GreenStone.
The western region of northeast Wisconsin saw the third consecutive year of stable benchmark value, following consistent growth the previous nine years. Since 2006, an 80-acre cropland parcel has increased from $197,000 to today’s value of $375,000. In the southeast part of the northeast Wisconsin territory, cropland value decreased for the third year after 12 and 18 percent increases in 2014 and 2015, to today’s appraised value of $520,000.
In Michigan, there was a 6.3 percent increase in the southwest, following a 7.7 percent decrease in 2017 bringing the value to $408,000. The mid-Michigan area remained stable with no change at $424,000. Cash crop land in southern Michigan went unchanged for the third year holding at $280,000.
Michigan’s northern thumb area continues to hold the highest value of the regions at $576,000 ($7,200 per acre), marking a 7.5 percent decline this past year. The Saginaw Valley cash crop land in Michigan, on a per acre basis, had a slight 0.7 percent drop to $6,375, coming down from the highest value recorded in 2014 at $7,406.
“Lower corn and soybean prices have stabilized the base rental rates in the Thumb region to the $200 to $225 range for properties with higher productive soils,” Hickey says. “We expected rates to decline, however with the continue competition for land, land owners have no motivation other than relationship loyalty to lower rates.”
The appraisal of the Michigan dairy with 1600 freestalls on a 40-acre site showed a 5.5 percent decline to $4,500,000, down from the 10-year high of $5,200,000 in 2015. The 60 tie-stall and 40-acre site in Wisconsin showed no change for the second year, holding at $318,000.
The 80-acre recreational benchmark land surveyed in northern Michigan saw a second year of increased value, coming in at $144,000 ($1,800 per acre) up from $128,000 in 2017.
According to Hickey, recreational tracts for hunting, fishing and non-consumer uses are in demand in Wisconsin and northern Michigan.
GreenStone monitors three areas in the transitional land category: southeast Michigan (Ann Arbor area); Lapeer County, Michigan; and Brown County, Wisconsin. Transitional land is defined as a property between uses with the current use likely to change.
The 40-acre tracts in Michigan showed modest gains with the land in the southern part of the state increasing 1.3 percent over 2017, to a value of $320,000 for the 40 acres; this increase follows double-digit growth in 2015 and 2016. Transitional land in Michigan’s thumb (Lapeer County) showed a slight decline of 2.0 percent to $160,000.