Southwestern Ontario Farmland Value Gains Slow in 2023

Southwestern Ontario farmland values continued to move higher in 2023, but certainly not with the same fervor as previous years. 

The latest annual Southwestern Ontario Land Values Report from London, ON-based Valco Consultants Inc showed the average increase in farmland values across the 11 counties studied was just over 10% compared to a year earlier. That is down sharply from the approximately 25% increases seen in the previous two years and falls back into the more typical long-term range of 5-10% annual gains. 

In many areas, land values in the 11 counties reached new highs in 2023, trading at over $25,000/acre, with some parcels even garnering over $40,000. However, report author Ryan Parker said there was a shift in the land market over the final quarter of 2023, with fewer bidders and softer prices in some cases. 

“In multiple areas where values had been $30,000-$40,000 per acre for the year prior, there were a few farm sales that came in lower than $30,000 per acre,” Parker wrote. “Although I try to avoid the rumour mill, it was notable for the first time that I can recall that the buzz in the countryside was about these lower sales and not about the new high sale.” 

Since then, however, the report said that a few farms in those same areas have actually sold at new highs, suggesting a highly variable market with a wide range of values. 

In addition to higher interest rates, the report attributed the overall slowdown in farmland value gains in 2023 to weaker commodity prices, noting the price of corn dropped about 35% during the year. That was a less vicious decline than in 2013 when the price of corn dropped about 60%, which kicked off a period when Southwestern Ontario farmland values increased at annual rate of between 2.6% and 9.7%. That lasted until 2020 and 2021, when interest rates plunged and commodity prices climbed – fueling a major runup in farmland values. 

“A logical theory would be that we will see lower farmland value increases for the foreseeable future if that future involves greater than 5% interest rates and less than $5 corn,” the report said. 

Among the 11 counties cited in the report – Huron, Perth, Oxford, Middlesex, Elgin, Lambton, Kent, Essex, Bruce, Grey, and Wellington – the largest 2023 increase in farmland values was seen in Huron at 23.8%. That was followed by Wellington at 18.5% and Oxford at 16.1%. At the other end of the scale, farmland values in Grey County were essentially flat this past year, increasing just 0.2%. Elgin also saw an increase of less than 1% at 0.9%, while Kent checked in with a 1.5% gain. 

Falling in between was Middlesex with a 15.3% increase, Bruce at 13.4%, Lambton at 8.4%, Essex at 6.9%, and Perth at 6.7%.