Based on recent farmland sales, the farm real estate bubble continues to expand.
But according to University of Nebraska-Lincoln ag economist Bruce Johnson, history shows that it can’t go on forever. In fact, Johnson thinks Nebraska farmland in particular could see a downward correction of 30 percent or more in the next few years.
“Commodity prices and income levels have been phenomenal for the last number of years, particularly for crop producers—but do not look likely to be forever the norm,” Johnson says.
Ag land real estate prices have nearly doubled in Nebraska over the past five years. Johnson says this large increase was previously unheard of.
“In fact, compared to the 70’s run-up to the crash of the 80’s, it’s even beyond that in terms of the buildup in just five years,” he says. “(In) some of the areas of the state, we’ve actually seen a 125-percent increase in roughly five years.”
Even with the bubble, Johnson does not predict a total bust comparable to the 1980s because farmers aren’t as burdened with debt.