“What you get for the money” – Buying Kansas Land
Buying Kansas land is an extremely attractive investment because it is valuable to a number of buyers for many different reasons. Buying Kansas land can be complicated and is capital intensive however, history has demonstrated that land ownership can be an extremely rewarding investment over time. Buying Kansas land is a process and because there are so many variables to consider when buying Kansas land, it is highly recommend that you engage a real estate professional with a specific expertise in Kansas land to assist you.
It is important to remember that no two parcels of land in Kansas are the same. Individual farms and tracts of land are unique in soil composition, annual rainfall, suitability for crops and wildlife potential. Each parcel of land has its own relative worth and value.
In Kansas, the price per acre of land varies greatly from one side of the state to the other. According to the Department of Agricultural Economics at Kansas State University, the average value of land for 2013 was approximately $4,100 per acre in the North East region of the state. The price per acre declines as you head south and west through Kansas where the average price per acre in the South West region was approximately $1,175 per acre. Some of the key factors influencing these prices include annual rainfall, urban sprawl, wildlife/recreational opportunities, soil composition and overall demand relative to available buyers.
A primary component of land value is land use. What does the land currently produce and what is it capable of producing? Is the land suitable for crops, livestock, recreation and hunting, wildlife or urban development? Land use is a big variable when looking at your overall return on investment. Land use determines annual income, if any, as well as the rate the land will appreciate over time.
As an example, consider pasture land properties in eastern Kansas where the native tall-grass prairies of the Flint Hills and Glacial Hills Regions receive on average 12” to 20” more rainfall and more dense forage than the short-grass prairies of the high plains in western Kansas. Grazing operations in the east have the potential to support more livestock per acre than their counterparts in the west. This correlates to the overall value of the land since you need fewer acres to support the same size livestock herd in the east as you would in the west.
Historically, Kansas land has appreciated at a rate of 8% -10% per year over time. There are some years where appreciation is greater than others and rarely have we seen decreasing values in Kansas land. Land appreciation has been constant in large part due to scarcity because they aren’t making any more land.
The best way to ensure you get the right property at the right price is to have a clear objective for why you are buying Kansas land. Will your purchase be for investment, operation, recreation or building your dream home? Find a budget that you are comfortable with and stick to it. Even within specific regions of the state or from county-to-county, land values can vary significantly. It is important to understand why you are buying Kansas land and how much you can afford. When you 1) have a plan, 2) have hired a knowledgeable real estate expert and 3) stick to your budget, then any tract of Kansas land you buy will be a rewarding investment.
The following are items your land professional should discuss with you before buying Kansas land.
PRICE PER ACRE – Price per acre is the most common method for evaluating properties relative to specific area such as at the county or regional level. Price per acre gives buyer and idea of what property could be valued at relative to a specific area. Too often, prospective buyers focus too much on the price per acre. Price per acre is a single variable in the buying process and should NOT be the sole determining factor in your buying decision. Remember, no two land tracts are the same.
LOCATION, LOCATION, LOCATION: land values in Kansas range from $4,100/acre in the North East region to $1,175/acre in the South West region of the state. In more productive cropland and grazing land areas the value per acre is typically higher than lower producing areas with less annual rainfall.
SCARCITY – Supply and demand rule the economics of land just like most other things of value in the world. The fact that they are not making any more land is one reason land continues to appreciate in value. On a more localize level, population centers influence the value of land in Kansas. Land closer to population centers such as Wichita, Topeka or Kansas City typically commands a higher price than similar land in other areas. Land near population centers is more desirable for urban development and even recreational properties are valued higher because of their proximity to these centers of influence.
SO WHAT DO YOU GET FOR THE MONEY? – Average price per acre for all types of land (crop, grazing, recreation, etc) according to KSU Ag Economics for the 2012-2013 land values.
- North West Kansas – $1,725/acre
- South West Kansas – $1,175/acre
- North Central Kansas – $2,475/acre
- South Central Kansas – $2,200/acre
- North East Kansas – $4,100/acre
- South East Kansas – $2,400/acre