American Farmland Prices: A Bubble?

Abstract

American farmland value may be substantially dictated by potential for agricultural production. However, as is the case for most classes of real estate, it is also perceived as a conservative investment that could act as a stable store of value in uncertain economic times. Some investors seek farmland as an investment believed to be a hedge against inflation. Others desire a physical asset that would maintain value in the event that paper (or digital) assets were to become undesirable. There has been a constant pattern of increasing farmland values for more than 30 years. As this pattern has continued regardless of agricultural profitability and varied economic conditions, current American farmland values may constitute a bubble.