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UNIVERSITY AG ECONOMISTS FORECAST LAND PRICES IN 2025
Dec. 2, 2024
By Nick Paulson and Gary Schnitkey, Department of Agricultural and Consumer Economics, University of Illinois and Carl Zulauf, Department of Agricultural, Environmental and Development Economics, Ohio State University
Lower returns to rented land and higher interest rates began to signal the potential for downward pressure on farmland values in 2023 (see farmdoc daily from August 8, 2023).Those signals continue, with current fundamentals suggesting land value reductions of around 3% in 2025. A 3% decline would be in line with observed adjustments since the 1980s as well as expectations from professional farm managers surveyed in 2024. On the other hand, valid arguments exist for continued strength in farmland values. In particular, strength in the average financial position of grain farms suggests declines in farmland values, if they occur, are not likely to be significant in the short term.
Average Illinois Cash Rents and Land Values in 2024
The average cash rent in Illinois was $269 per acre in 2024, an increase of $10 per acre (3.9%) from 2023 (see upper panel of Figure 1). Average Illinois cash rents have increased by 21% since 2020 after a period of relative stability from 2015 to 2020 (see farmdoc daily article from September 3, 2024).
Average Illinois land values have had the same trends as cash rents. The average farmland value in Illinois was $9,550 per acre for 2024, an increase of $250 per acre (2.7%) from 2023 (see middle panel of Figure 1). Average land values have increased by nearly 31% since 2020, following the stable period from 2015 to 2020.
The average current return to Illinois farmland, measured as cash rent divided by land value, was 2.8% for 2024 (see lower panel of Figure 1). The current return measure has averaged just over 2.8% since 2020.
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