Land Prices for Real Estate in Chicago on the Rise | Chicago Real ...

Condos, high-rise apartments and new homes are usually the focus of our articles, so where does farmland fit into the equation?

In a survey by the Federal Reserve Bank of Chicago, it was reported that farmland prices in Illinois, Iowa, Indiana and Wisconsin rose 15 percent. What is important to note about rising farmland prices is that they affect bank lending standards. Bank regulators are worried that a farmland bubble similar to the housing bubble could occur, and this could potentially affect lending standards. If farmland prices continue to increase, banks will be less to willing to ease up their standards.

Economists say that any time there is an increase in land prices for real estate in Chicago, it is important for banks to be cautious about the way they distribute loans. There is currently a strong demand for farmland, so bank regulators are concerned that if farmers choose to buy more land than they can handle, this could cause land values to quickly plummet.

According to the Agriculture Department, net farm income is expected to hit $122 billion this year, which is the highest level since 1973. The reason is that corn and soybean prices are at record highs due to the recent drought.

However, as long as farmers purchase a manageable amount of land with a manageable loan, there won?t be any ?bubble? effect.

Source: http://www.chicagolandrealestateforum.com/2012/10/27/land-prices-for-real-estate-in-chicago-on-the-rise/

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