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Published: Sunday, 2/13/2005

Farmland prices sprout higher

BY HOMER BRICKEY
BLADE SENIOR BUSINESS WRITER
Experts say factors pushing prices up include development near cities and farmers adding to their own acreage. Experts say factors pushing prices up include development near cities and farmers adding to their own acreage.
LISA DUTTON / BLADE Enlarge

"Farmland prices are the highest I've ever seen," said H. Bruce Omness, owner of HBO Realty in Lima and a veteran of 30 years in the business.

"I would say it's a seller's market right now."

Farmland prices rose about 5 percent last year, on top of similar gains annually in recent years, he said.

Dirk Meyer, a real-estate agent and auctioneer with Whalen Realty and Auction Service's Napoleon office, has seen even greater price increases in northern Henry County and southern Fulton County, where the black soil is highly productive.

From the beginning of last year to the end, he said, prices jumped $400 to $600 an acre, to $2,800 to $3,200. "It took a big jump and it's staying there," he said.

All around northwest Ohio and southeast Michigan, farmland prices have gained for years, mirroring state and national trends, according to brokers, appraisers, lenders, agricultural economists, and county auditors.

By last year, farmland was valued at an average of $2,930 an acre in Ohio, up 7 percent from 2003, said Phil Guss, a statistician with the Ohio Agricultural Statistics Service in Reynoldsburg.

Gains have averaged about 6 percent since 2000, he said.

In Michigan, such land went for about the same amount, $2,920 an acre, up 9 percent from 2003, said Vince Matthews, deputy director of Michigan Agricultural Statistical Services. The annual rise the past four years has been 9 percent.

Among the factors pushing up the values, experts say, are housing and commercial development near cities, farmers increasing the size of their farms to be more competitive and cost-effective, investors looking for tangible assets, and urban residents buying rural land for recreation, especially hunting and camping.

Anecdotal evidence from brokers and appraisers in northwest Ohio and southeast Michigan shows farmland generally being sold for $2,000 to $3,600 an acre - and up to $3,900 in Lucas County.

Some exceptions, however, include 20 acres on the edge of Bowling Green sold for $77,000 an acre as a site for apartments.

The $3,000-an-acre threshold was broken at least three years ago in four area counties, according to U.S. Census Bureau figures.

For 2002, the latest year available, land in Lucas County was valued on average at $3,365 an acre; in Erie County, $3,118; in Allen County, $3,031; and in Monroe County, Michigan, $3,152.

Sale prices in the last year or so likely added counties to that $3,000 group.

However, prices have leveled off or declined slightly in some areas, perhaps because of development patterns or the types of crops grown there.

Lucas County had 10 farmer-to-farmer sales last year, averaging $3,935 an acre, up 6 percent, said Jerry German.

And the county had 13 sales of farmland destined for development, at prices averaging $14,028 an acre (with a high of $25,700), just about even with the previous year, Mr. German said.

The Wood County auditor's office reported values averaging $2,200 for strictly farmland, down slightly from previous years.

Still, many parcels near developments sold for $10,000 or more an acre.

In Ottawa County, the auditor's office said recent sales have largely been to developers, which boosted prices, such as 44 acres in Allen Township for $9,200 an acre, 65 acres in Catawba Township at $13,500 an acre, and 28 acres in Danbury Township at $9,100 an acre.

Non-farm uses drive the sale prices, said Lynn Forster, an agricultural economist with Ohio State University in Columbus.

Nearly half of Ohio's farmland is owned by non-farmers, including investors who bought land for speculative purposes and retired farmers who lease out their properties, he added.

"The market is pretty strong," said Joe Newlove, owner of Joe Newlove Real Estate & Auctions in Wauseon. He estimated that prices in Fulton County rose about 7 percent last year, to probably an average of $3,000 and a high of $3,600.

"I've never seen anything like it," said Joe Mohre, of Edon, Ohio, who has been selling land, or lending on it, for 40 years. "Almost anything is worth at least $2,000 an acre."

Now a broker with Westfall Realty, of West Unity, he said land in Henry, Fulton, and Defiance counties went up 2 to 3 percent in the last year, with prices at $2,700 to $3,500 an acre and some rising to $5,000 to $6,000 near developed areas.

Although some experts say farmers are reluctant to sell now because of sentimentality or for capital gains reasons, others say farm families with no ties to the soil are more likely to sell, and get more money, than rent out the land.

In southeast Michigan, farmland prices generally range from $2,000 to $3,000 an acre for the most part, but some exceptions are land near Tecumseh, in Lenawee County, which is going for $6,000 because of its proximity to Ann Arbor, said Rick Dennison, senior appraiser for the Adrian office of GreenStone Farm Credit Services, of Lansing.

In Monroe County's Bedford Township, "the sky's the limit," he said, adding that some farmland has gone for $10,000 an acre there, as a result of development.

He theorized that many investors, tired of the stock market, opted for tangible assets like land.

Many buyers are from the communities around Detroit, with people acquiring the land for hunting, camping, or four-wheeling, he said.

Contact Homer Brickey at: homerbrickey@theblade.com or 419-724-6129.



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