Economists and ag journalists are so anxious to see a reversal of farmland prices so their decades-long warnings can be said to have come true they are starting to confuse an inflection point with a "tipping point".
Iowa farmland values have definitely hit a tipping point, agreed Iowa State University economist Mike Duffy. The state's ethanol industry helped spawn four years of 20% to 30% land appreciation since 2007, almost on par with 1970s-style inflation. "Now the gains are slowing down, but I don't see a big collapse ahead," said Duffy, who thinks Iowa markets might slip back to 10% year-over-year gains by November, half the year-ago levels. "This adjustment will feel more like a tire with a nail in it." [More]I done the ciphering and "slipping back" to 10% gains does not consitute a tipping point, IMHO. A lot of 401K owners would love a mere 10% annual gain.
And charts like this don't help.
This is bad charting. While labeled "Actual thru 2012", the blue line should be dotted or indicative of the shift to estimates for 2013 and beyond. The decline shown is all in the author's imagination right now.
Well, I'm going to an auction tomorrow for 80 screwy acres next to me.
We own the 40 acres in the corner as well as farm all around it. The drainage ditch makes it a headache but does give us a great tile outlet. Ground quality is meh.
Since we're interested, my experience is it will go sky-high. I'll let you know how it turns out this weekend on US Farm Report (we're bringing a shooter down).