Murray Wise in Progressive Farmer: “Still no better place for cash than farmland

I had the privilege of speaking at length recently with Victoria G. Myers, Senior Editor of Progressive Farmer Magazine. Here’s an out-take based on my comments, which appeared in the November edition. (Used by permission.)

Murray Wise, founder of Murray Wise Associates, based in Champaign, Ill., says there is still no better place for that cash than farmland. He has certainly helped rehome more than a few dollars over his career, noting the company has sold more than $2 billion in property during the last 20 years. Wise has seen the highs and, more importantly, the lows. He’s still seeing no signs that this land market is going to be taking any more than single-digit corrections for the next year.

“The land market today has more support than it normally would as an investment thanks to the low interest rates,” he explains. “I haven’t seen a financed farm in years. Every sale I’ve been part of has been a cash sale, and most are going to farmers.

“Think about the alternative investments out there,” he continues. “Do you go to the local bank for a CD? Do you buy into stocks? Do you look at bonds? I think a lot of people still feel land, even at these prices, offers more stability.”

Wise defines today’s Midwest land market as “confused.” There are some townships where values are above year-earlier levels, and others where values are lower. It depends on who the neighbors are and whether they are in the market for land.

Remarking on how quickly the market is changing, Wise related a report of a land sale north of Marcus, Iowa. The good, well-drained cropland sold for $11,600 an acre. This was $2,400 an acre less than the pool at the local elevator was projecting of $14,000.

A farm across the road had sold for $15,000 an acre a few months earlier. The sale was well attended, he adds, with the usual area buyers on hand. Wise says this is an example of the confused state of the market. He expects more clarity by spring.

“I think this winter there is going to be some major upheaval when it comes to renewing cash leases. The farmer wants lower rents; the landowner wants the same rents he’s gotten the last two years. Until that shakes out, it’s hard to put your arms around where the marketplace is going.”