By Andrew Joseph, Farms.com, Photo by Gabriel Jimenez on Unsplash
We all know that the real estate market has been going nutsy-fagan recently for both urban and rural properties both here in Canada and for our southern neighbours.
Case in point: US$6-million (~CDN$7.667-million) in sales recognized for four farmland properties in South Dakota.
It’s not investors hoping to one day cash in on selling current urban farmland when the city next door decides it needs to expand—we are talking about South Dakota, and besides there are indeed many imposed city limitations about urban land gobbling.
No, instead to hear it from one of the auctioneers discussing the Codington County sales: “It’s good dirt.”
Sold:
- 154.6 acres featuring 144 cropland acres with a Corn Suitability Rating (CSR) of 90.4 (out of 100) fetched US$1.78-million (~CDN$2.275-million) or US$11,500 (~CDN$14,700) an acre;
- 148.58 acres with 146.83 cropland acres and a CSR of 85. It sold US$1.6 million (~CDN$2.044-million) or US$11,000 (~CDN$14,050) an acre;
- 142.47 acres of 142 acres of cropland and an 86 CSR sold for US$1.7 million (~CDN$) realizing US$12,000 (~CDN$) per acre;
- 79.5 acres with 68 cropland acres and a CSR of 74 was sold for US$874,500 (~CDN$1,121-million) or US$11,000 (~CDN$14,100) per acre.
Expected sales were for approximately US$8,000 to $10,000 (~CDN$10,250 to $12,800) an acre, so the realized $12,000/acre (~CDN$15,400) peak was a good surprise.
Driving factors for the higher monies per acre are low interest rates and a limited supply in South Dakota, plus a steady price realization for crops over the next couple of years.