Serving Minnesota and Northern Iowa.

Land values, rental rates rising across state

By Janet Kubat Willette

Date Modified: 02/09/2012 3:43 PM

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MANKATO, Minn. — Land value and rental rate survey results released last week by the Minnesota Chapter of the American Society of Farm Managers and Rural Appraisers show rising rental and land value rates in Minnesota.

Leon Carlson, of Upper Midwest Management Corporation in Olivia, estimates that good quality Minnesota land may match Iowa's increase of 32 percent in land value. Lower quality land, however, isn't increasing in value as quickly. The value of recreational land has dropped along with the economy.

Carlson, a member of the chapter's Land Value and Rental Rate Committee, did a survey of 10 individual members from southern, central and northwestern Minnesota during the last week of December and first two weeks of January.

He presented his data along with data compiled by Farryl Kluis of Hoysler Associates in Faribault on Jan. 26 at the organization's 83rd annual meeting. Kluis is chairman of the chapter's Land Value and Rental Rate Committee.

He did three online surveys that were sent to members from mid-October to late November. Kluis compiled the results last month. One of the online surveys was also sent to members of the Realtors Land Institute.

The rate of increase in land value varies across the state and by type of land, Kluis said.

Carlson's survey found that in the southwest area two land sales brought more than $12,000 per acre. In Mower County, land was selling for $7,000 to $8,000 an acre. In south central Minnesota, land prices increased 30 percent to 40 percent from a year earlier.

In the Olivia area, sale prices are up 20 percent or more from January 2011. In the New Ulm area, the highest land sales were in the $9,000 per acre range.

It's a wild market, Kluis said, telling of land sales of $6,000 and $9,000 per acre in the same neighborhood in a short time period. The land was of similar quality.

About 44 percent of those surveyed expect land prices to remain constant and another 44 percent expect land prices to increase from 1 percent to 10 percent in 2012-2013 compared to 2011-12. About 11 percent of those surveyed expect land prices to increase by 11 percent to 20 percent.

Rental rates aren't keeping pace with increasing land values, Carlson said, although they are increasing.

In his survey, land rental rates were reported at more than $400 per acre in southeast Minnesota and the New Ulm area. Rental rates are approaching $400 per acre in the southwest. In the Olivia area, cropland rental rates are in the $250 to $325 per acre range.

In south central Minnesota and the St. Cloud area, more flexible cash rent leases are being used.