Benchmark Valve Update
Cary C. Matthews
Chief Appraisal Officer
Land values appear to be increasing slightly in Eastern Arkansas. Increases in value began to slow after 2015 and are now flat to increasing. Based on the period from 7/1/18 to 6/30/19, benchmark values ranged from no increase in Clay County to a 4.69% increase in Craighead County. St. Francis County increased 4.39%, Cross County increased 1.20% and Lee County increased 2.27%. Farm Credit Midsouth uses five benchmarks to estimate changes in land values. Land values were steadily increasing for several years in Eastern Arkansas. In 2017 land values began stabilizing and slightly declining in 2018. See chart below showing the benchmark land value change since 2015.
The Cross County Benchmark is a near level, irrigated rice and soybean farm. Several sales were analyzed, and a value was estimated in the mid-range at $4,200 per acre. The value has been increasing to stable in prior years but experienced a significant drop in 2018. The value rebounded slightly in 2019.
The Craighead County Benchmark is a precision-leveled, irrigated cotton, soybean, and corn farm, with the irrigation well located off-site. After adjustments, the sales presented a reasonable range, with the best sales indicating around $6,700 per acre; therefore, a value of $6,700 per acre was estimated. The 2018 value was estimated at $6,400 per acre. This indicates an increase of 4.69% compared to no change last year and 1.59% increase in 2017.
The Clay County Benchmark is a precision-leveled and irrigated cotton, soybean, and corn farm. Sales were very limited this year compared to 2018. Sales similar to the benchmark farm were almost non-existent between July 2018 and June 2019. There were only two sales located similar to the benchmark farm in the time period previously stated; therefore, three older sales were used for support. The value was estimated in the mid-range at $6,500 per acre. The value remained stable again this year.
The Lee County Benchmark is a precision-leveled and irrigated rice, soybean, cotton, and corn farm. Several sales were analyzed that sold in the past 12 months, with six selling in the first half of 2019 and the remainder selling in the last half of 2018. The 2018 value was estimated at $4,500 per acre. This indicates an increase of 2.27% compared to no change since 2016.
The St. Francis County Benchmark is a precision-leveled and irrigated rice and soybean farm. Several sales were analyzed, and a value was estimated in the midrange at $4,800 per acre. The value has been increasing to stable in prior years but experienced a significant drop in 2018. The value rebounded in 2019. Note: The price per acre in 2018 included structural improvements. The structural improvements were not valued for 2018. The percent change in 2018 (-3.43%) is based on the value of the land ($4,762) in 2017.
In conclusion, this year’s update appears to be, when compared to recent years, a return to more stationary levels with certain areas experiencing slight increases in values. It is my opinion that stagnant to slight increases are indicative of a land market that, while not significantly increasing or decreasing, is healthy and is a market that does not point to a precipitous drop in value in the near future. 2019 benchmarks show an overall increase of 2.51% for the period 7/1/18 to 6/30/19.