The Federal Reserve Bank of Chicago November 2011
Banker Credit Conditions Survey Including a Farmland Price Report
[Note that the Seventh Federal Reserve District encompasses the northern portions of Illinois and Indiana, southern Wisconsin, the Lower Peninsula of Michigan, and the state of Iowa.]Banker Credit Conditions Survey Including a Farmland Price Report
Key points from the report:
- At 25 percent, the year-over-year gain in agricultural land values in the third quarter of 2011 for the Seventh Federal Reserve District was the largest in just over three decades.
- The District’s farmland values surged 7 percent from the second quarter to the third quarter of 2011, matching the highest previous quarterly gain since 1977.
- Credit conditions for agricultural producers in the third quarter of 2011 remained favorable, as interest rates on farm operating and real estate loans declined further.
- Funds availability relative to the prior year had not been higher at District banks since 1987.
- Iowa’s agricultural land values led the District with a year-over-year increase of 31 percent for the third quarter of 2011 (see map and table above).
- Since District farmland values hit bottom in 1986, the compound annual growth rate for farmland values has been 5 percent (adjusted for inflation).
- Elevated levels of farm income and heightened demand for farmland continued to support further gains in agricultural land values.
- Iowa had the lowest rate for farm mortgages (5.24 percent).
- Indiana had the lowest rate for operating loans (5.44 percent).
- Only 8 percent of the respondents forecasted more forced sales or liquidations, and 42 percent forecasted fewer.
- For operating loans, farm machinery loans, and grain storage construction loans, there were more responding bankers who expected augmented volumes than those who expected smaller volumes.
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