T
he agricultural real estate landscape in the Midwest and plains states remained stagnant through 2024, with non-irrigated cropland values showing little to no change from the previous year. This stability was a result of tightening farm financial conditions and elevated interest rates on farm loans, which cooled land markets. The Federal Reserve's Surveys of Agricultural Credit Conditions revealed that while credit conditions did deteriorate slightly in the fourth quarter, overall financial stress remained contained.

    A notable exception to this trend was the Dallas District, where land values fluctuated significantly due to strong demand from recreational and investor interests. However, even here, the impact on the broader agricultural real estate market was minimal.

    The farm sector's outlook for 2025 remains subdued, with narrow profit margins for crop producers expected to persist. Nevertheless, recent increases in corn prices and potential government assistance under the American Relief Act could provide a much-needed boost to the sector in the coming year.

    Interest rates have been a major factor in the softening of agricultural real estate markets, with average farm loan interest rates remaining at multi-decade highs. While these rates did decline slightly over the past year, they still pose significant challenges for farmers struggling with large debt burdens.

    The weakening of farm finances has also taken its toll on farmland values, which have flattened alongside declining profit margins for crop producers. A growing share of survey respondents reported lower farm income compared to the previous year, highlighting the sector's ongoing financial struggles.

    Despite these challenges, agricultural credit conditions remain relatively stable, with limited signs of widespread financial stress in the farm sector. However, a gradual increase in loan repayment rates suggests that softening farm finances are exerting downward pressure on credit conditions.