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How the Government Shutdown Affects Land Prices

By Jason Smith, CAI Auctioneer | Land Broker | Published January 22, 2019

LandShutdown

 

selling land in this political environmenT

It is day 32 and the government is still shutdown and still affecting the lives of many across the country. We discuss how land prices are holding up in this political climate, what considerations should be taken when selling land right now, and what the market may look like in the coming months.

Land prices during the longest government shutdown ever

So far, in terms of land value and prices, we are not seeing any harm from the longest government shutdown in history. Prices are still coming in strong and solid. The most noticeable change in the farmland market is the low volume of sales. Empty auction calendars across the Midwest make it evident that people are nervous to sell in this political climate. 

What are they nervous about? I'll repeat myself - prices are still coming in strong and solid. I don't think sellers need to hold back. The market is still strong, and selling into a predictable market like this is the best way to have a good sense of what your property will bring.

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What to consider when selling land during a government shutdown

Farmers and producers interact with the government in many ways. Even those selling land are experiencing issues that would not normally arise. However, the USDA released a bit of good news today - all Farm Service Agency offices are reopening on Thursday to provide services for farmers and ranchers during the shutdown. While this won't solve all of the problems for farmers and producers, it will help bring a few important services back online.

Right now, sellers in this market should account for the shutdown in the terms and conditions of their auction. Many unforeseen problems can result from the current lack of government support and programs. What if you get to closing day and the government shutdown impedes with you closing with the buyer? Your terms and conditions should include protections for your transaction should the shutdown affect it. While the shutdown is not making buyers spend less, preparation for issues such as this can help ensure a smoother selling process.  A professional auctioneer or broker can anticipate these things and help you prepare.

Looking into the future of land sales

The outcome of January is dependent on both the trade war and the end of this government shutdown. The vast majority of farmers and producers believe President Trump is in their corner. While the political issues may be messy now, many foresee the outcome for the agriculture industry being better than before. Because of that, we aren't seeing any pull-back on spending by this market. The demand is there and keeping the prices strong.

Like I talked about earlier, we've got sellers nervous to put their property on the market. However, the buyers are out there keeping the prices robust! We don't have a crystal ball to see what this now-strong market has in store for us three to five months down the road. If a person wants to sell a farm, now is the most predictable time to be able to do that and have a good sense of the outcome. 

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