Is Missouri Land a Good Investment?

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Is Missouri Land a Good Investment?
By

Bart Waldon

Known as the "Show-Me State" for its tradition of rational skepticism and prudent personal finance, Missouri has a complex landscape when it comes to land investment. With rich farmland in the north, the bustling economies of Kansas City and St. Louis metro areas, and the tourism appeal of the Ozark Mountains region, there is no shortage of factors to consider if you're exploring investing in Missouri land.

To help showcase if Missouri land represents a prime or problematic investment opportunity, we will analyze key indicators like market trends, land values, development prospects, and more at both the state and regional levels. We'll also share insightful first-hand perspective from Land Boss, an established Missouri-based land investment company.

So whether you're an aspiring farmer looking to purchase your first acreage, an out-of-state investor exploring commercial development sites, or simply want to better understand the Show-Me State's unique land economics, read on for an in-depth guide on whether Missouri land is a good investment in 2023 and beyond.

Land Prices and Value Trends Across Missouri

Before determining if land is a smart buy, the first question is often: how much does it cost? Land prices in Missouri vary greatly depending on use, location, and site-specific factors. But overall statewide trends provide helpful context.

According to the US Department of Agriculture's 2022 Land Value Summary, across all land uses, the statewide average value in Missouri is $3,360 per acre. This represents an increase of $480 per acre (or 17%) over 2021. However, land value changes differed significantly by region:

  • In the crop-intensive northern Plains region, land values rose over 25% to $5,070 per acre
  • The Ozark Mountains region saw a modest 4.8% increase to $2,640 per acre
  • Pasture land values grew 14.2% to $2,590 per acre

Compared to neighboring states, Missouri's overall statewide land value sits below Illinois ($8,100 per acre) but above Kansas ($2,050 per acre) and Arkansas ($2,780 per acre).

Nationwide, the USDA pegged average 2022 land values at $4,220 per acre - representing a 14.8% annual increase. This continues a decade-long trend of steady land value appreciation, which signals healthy demand drivers.

Key Factors Impacting Missouri Land Values

Several converging socioeconomic factors underpin recent increases in Show-Me State land prices:

  • Low interest rates make land acquisition loans more affordable, expanding the pool of qualified buyers
  • High commodity crop prices have farmers competitively bidding for premium grain and soybean acreage
  • Urban sprawl around Kansas City, St. Louis, Springfield, and Columbia drives housing development demand for rural parcels near metropolitan centers, resulting in farmland being converted to residential uses when inventory is limited closer to cities
  • Recreation demand, especially since 2020, is causing heightened interest in rural vacation, retirement and second homes sites - particularly in scenic Ozark Mountains and Lake of the Ozarks areas

With these positive value drivers projected to continue near-term, industry experts forecast Missouri land values to keep rising around 12% annually over the next three years.

Regional Outlooks for Real Estate Development

Beyond agriculture, evaluating Missouri land for real estate development potential also helps determine its investment merit - especially for commercial uses or building residential communities.

The Kansas City metro area anchors the state's strongest major real estate market. With expanding tech and bioscience industries plus domestic in-migration, the KC metro is forecast to see robust home building and retail construction this decade. Raw land suited for housing subdivisions or mixed-use builds nearer to core urban areas like Independence, Lee's Summit, or Riverside should see solid demand.

However, some industry watchers warn the KC market could soon face oversupply, noting its urban core still has significant vacant lots available from previous decades. Investors should closely analyze proposed projects' competitive positioning.

The St. Louis MSA also boasts sound residential growth fundamentals, benefitting exurban counties like St. Charles and Jefferson with greenfield development sites. Speculative investors may still find selective redevelopment opportunities in struggling inner-ring North County municipalities, but higher crime levels introduce added risk.

Beyond the two major metros, development prospects in rural cities remain mixed. Affordable small metros like Springfield, Columbia, Joplin, and Cape Girardeau are seeing a spike in housing starts, making their suburban-fringe lands worth tracking. But more remote towns face net population declines, signaling weak economic expansion potential.

Pro Tip: Target parcels within 30 miles of Topo populations over 150,000 for the best bet at commercial usage or master-planned community uptake.

SWOT Analysis of Missouri Land Investments

When evaluating any investment, it helps compile a SWOT analysis reviewing its Strengths, Weaknesses, Opportunities and Threats. Below is a SWOT overview specific to buying land in Missouri:

Strengths

  • Rising land values exceeding national benchmarks
  • Strong crop commodity pricing bolstering farm values
  • Healthy demand drivers from residential developers near major metros
  • Scenic Ozark Mountains and lakes region appeals to tourists and second-home buyers

Weaknesses

  • Questionable redevelopment demand in struggling rural counties
  • Market untested for speculative projects in smaller MSAs
  • Sweeping acreages in northern & western plains offer few economic catalysts

Opportunities

  • Growing agribusiness due to fertile soils and central location
  • Suburban greenfield sites in KC & St. Louis metro footprints
  • Vacation/recreation property interest post-pandemic

Threats

  • Potential oversupply depressing values in KC urban core
  • Geographic overconcentration in storm/tornado-prone regions
  • Rising energy costs limiting tourism travels through the region

By weighing these SWOT factors overall, Missouri currently presents a relatively appealing risk-reward balance for land investors - albeit with some locational nuances. Competitively priced farms with irrigation access in well-tested cropland belts make stable plays. And certain fringe parcels adjoining top metro suburbs also hold strong income potential.

Key Takeaways on Missouri Land Investments

In closing, when approached strategically based on location attributes and economic trajectory, Missouri land represents a reasonably appealing investment at current value levels - especially for agricultural usage. The state population is projected to continue slowly expanding this decade, fueling housing demand in target metro area suburbs. And market-specific research remains vital to maximize upside and mitigate risks before buying raw land inventory across Missouri’s varied regional terroir.

So while the Show Me State may have a guarded investor psychology, compelling opportunities exist for land buyers who focus their efforts and structure acquisitions wisely. Use the guide points and resources herein as a starter toolset to begin your due diligence if exploring Missouri land deals in 2023. Happy investing!

Should You Invest in Missouri Land in 2023?

Missouri offers selective opportunities for savvy land investors who focus their acquisition efforts and mitigate risks. Here is an overview of current factors to weigh if considering Show-Me State land deals.

Favorable Value Drivers

  • Steadily rising land values topping 17% annually across all uses
  • Strong crop prices spurring farm and ranch purchase activity
  • Housing developer demand for suburban-fringe parcels near expanding metro economies

Location Remains Key

Ideal targets for near-term upside include:

  • Farmland in northwest counties with rich soils and irrigation
  • Raw acreage strategically situated in path of Kansas City and St. Louis suburban sprawl
  • Recreational/lifestyle properties in Ozark Mountains & Lake of the Ozarks

Proceed With Caution

However, many rural counties face economic stagnation. Avoid speculative plays in:

  • Western plains with few value catalysts
  • Struggling bootheel and delta counties
  • Small towns with pessimistic demographics

Conduct In-Depth Research

While selective opportunities arise, thorough due diligence remains vital to ensure a site aligns with a local growth thesis before investing in Missouri land this coming year.

Final Thoughts

Missouri farmland can represent smart growth assets, while housing-boom communities surround KC and growing STL metro areas. However, distressed rural counties facing stark job loss and closing factories translate to stranded land investments. Although the Show Me State offers savvy buyers inherent value, lackluster population and positivity trends hide west of U.S. Route 63; the Ozark's striking mountains or bustling eastern cityscapes present more secure landowner opportunities. Successful investing requires equal parts art and due diligence to identify locations poised for prosperity in 2023 – rather than stagnation. Approach Missouri land deals with eyes fully open to both potential risks and returns.

Frequently Asked Questions (FAQs)

What are average land prices per acre currently in Missouri?

According to latest USDA data, average land values across Missouri are around $3,360 per acre. Prices range above $5,000 for irrigated cropland in northern counties to $2,500 or below for rural pasture/timber land.

Which Missouri regions have the best outlook for land investments?

Prime targets include farmland in northwest and central counties like Carroll, Caldwell, and Boone with both good soil quality and access to irrigation. Residential development potential also drives land values around expanding metros Kansas City, St. Louis, Springfield and Columbia.

Does Missouri land present risks for buyers?

Rural counties with declining economic and demographic trends pose significant risk if purchased for speculative plays rather than existing agricultural use. Conduct careful research before investing.

How fast are Missouri land values currently rising?

Missouri has seen hearty value gains, averaging over 17% higher versus just the last year across different land use categories according to 2022 USDA data. Multi-year state-level increases are among the top nationally.

Should out-of-state investors consider Missouri land acquisitions?

Missouri can represent a reasonably appealing opportunity for external investors comfortable analyzing local growth dynamics. Retaining professional guidance to navigate zoning, regulations, taxation, and tenant matters assists with risk management.

About The Author

Bart Waldon

Bart, co-founder of Land Boss with wife Dallas Waldon, boasts over half a decade in real estate. With 100+ successful land transactions nationwide, his expertise and hands-on approach solidify Land Boss as a leading player in land investment.

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