Quarterly Update with Pat Karst

By Lindsay Humphrey

12 /21 /23

This year will likely be marked by price variation for land but that’s not all Halderman Vice President Pat Karst had to say as he wrapped up 2023 in a neat bow.

Where land prices were consistent in 2022, they varied in 2023, especially in the latter half. Everything from record-breaking high prices to lower values on a few occasions kept everyone guessing what the market would do next.

Evening Out

“Overall, land prices are steady based on the data we collected,” Karst said. “The first six months of the year were mostly flat and then we saw a lot of price variability in the second half. It’s nothing like 2021 where the prices got on a rocket ship and increased by 30 and 40 percent almost overnight.”

While predictability wasn’t something Halderman saw in the second half of the year or even the last quarter, there’s still a lot to celebrate this holiday season.

“We sold two really large farms this fall, one in August and another in September, and it was about 3,000 acres between the two,” Karst said. “Everyone on our team really had to pull their weight and it was a great group effort. I always appreciate when we can do things like that and do them well.” Both sales achieved the appraised value for each. Those appraisals were done in early 2023.

Another sale in December saw lots selling anywhere from $4,000 to $6,000 an acre higher than expected which saw some acres going for up to $20,000.

“It was fun to watch the client’s face as the prices climbed higher and higher,” Karst said. “Seeing our customers go through the process and then getting a favorable result makes the job satisfying to me.”

Only slightly elevated from last year’s 75/25 split for online versus live auctions, Halderman conducted 79 percent of their auctions online and 21 percent live. Karst reports that clients are more than comfortable with the online bidding platform and many even prefer the anonymity of it. Both live and online auctions continue to bring good results for Halderman clients.

On the Horizon

New faces have and will be joining Halderman in the coming months. New talent and new energy will be exactly what Halderman needs as they begin a brand-new sale season where quite literally anything can and will happen.

Since the Farm Bill expired in October, a vote extended the 2018 version until further notice. Once again, only time will tell how long that will last but for the time being, Karst isn’t worried about it for himself or his customers.

“I think 2024 will be another pretty decent year; the opportunity to buy good farm ground will exist and prices will still be high for sellers,” Karst said. “If someone is afraid that they missed the best time to sell land, opportunities will still exist for them to get good prices next year. We’re still at an all-time high even when adjusting for inflation.”

Interest rates, on the other hand, are anyone’s guess. Originally, many thought that rates would be lower soon. Recent economic reports suggest interest rates reached their peak and may decline slightly in 2024.

As we close 2023 optimism about the new year is still strong.

“As far as income goes, 2022 was a record year; 2023 will not end up quite as good even though it’ll still be an above average year,” Karst said. “As we look at input costs for 2024, with a few exceptions, a lot of them will be substantially lower than they were in 2023. Both the 2022 and 2023 crop were the most expensive we’ve planted in quite a few years.”

For an in-depth look at the numbers on those input costs, check out this article from Purdue University: click here.

Turning attention to Indianapolis, water rights might be something to keep a tab on in the coming year.

“I never thought we’d be talking about water rights and water issues in the eastern Corn Belt, but we are,” Karst said of the LEAP project in northwest Indianapolis. “I think everything going on with that project will have an impact on irrigation in Indiana. I’m expecting there to be some new laws and regulations we have to report on irrigation.”

Drilling high volume water wells could become a bit more difficult to accomplish thanks to those regulations. Nothing of the sort has been passed yet, but it’s something Halderman is keeping an eye on as the project northwest of Indianapolis progresses.

Reflecting on another great year, Karst and everyone at Halderman wants to thank all of their clients for another successful and enjoyable year. We wish everyone a happy and safe holiday season with loved ones!