For the past 15 years, University of Minnesota economist Steve Taff has tracked the average sales prices of farmland, summarizing real estate transactions by multi-county region and at the state-wide level.

So it wasn't news to Taff when he pulled together Minnesota's 2005 totals and saw that farmland prices continued to rise for the 12th straight year.

What's most telling about the latest numbers, published last week in his Minnesota Land Economics database, are the shifts taking place in east central and northwestern Minnesota, he says.

In the East Central Region, which includes the northern Twin Cities suburbs, the 2005 median farm real estate price of $2,560 per acre is more than six times what is was in 1990 ($409 per acre). The area is bordered by Washington and Ramsey counties in the south, and Carlton, Aitkin and Crow Wing counties in the north. The price was up from $2,161 in 2004 and $1,542 in 2000.

"What's driving that?" Taff said. "It's the northern suburbs and people are paying a lot of money for that land, and they're not paying it for farming."

Taff analyzes actual sales prices submitted to the Minnesota Department of Revenue, to whom counties are required to report all property transactions. Regional boundaries align with the USDA reporting districts. His user-friendly database is accessible through a University website which is intended for anyone to use:

http://www.cffm.umn.edu/landeconomics/landdata/

He also publishes an annual report through the Department of Applied Economics' Waite Library.

The Extension economist says the key to understanding land prices is to zero in on certain parts of the state, not overall numbers for Minnesota.

"What does the average price of land in Minnesota tell us, when we've got land selling for $4,500 an acre and land selling for $500 an acre in different parts of the state?" Taff said. "Talk to me about smaller areas, and then the smaller the area, the more of an average. And the movement of an average might begin to tell you a story."

After years of remaining fairly constant, prices in northwestern Minnesota are starting to rise, Taff says. The region bordered by Clay and Becker counties in the south and as far inland as Clearwater County features two distinct land markets - the Red River Valley floor and the higher ridges area to the east. The median price per acre in the Northwest Region climbed to $881 in 2005, compared to $683 in 2004 and $553 in 2003.

Although rising prices are bad news for potential buyers and new farmers, Taff warns that rising property taxes can make things more difficult for landowners, too.

"People will often use rising land prices to say, 'Oh, the farm economy must be doing good because prices are going up,'" Taff said. "I don't believe that for a second. It's a conventional thing to make that assumption. We've got plenty of other indicators that can help us understand whether rural economies are doing better or worse. The price of land is not a very good indicator."