In addition, typical mortgage loans in the 1980s included longer amortization periods (up to 40 years in some cases) and higher loan-to-value fractions than is typical today. Two important implications include that the principal reduction occurs more slowly in longer length loans, and that the fraction of the asset value in the form of current income required to service the debt was also much higher in the crisis period than is the case today.
Next, it is well-accepted that asset values reflect market participants' expectations regarding income levels and riskiness of income. In the case of farm real estate, there have been several recent years with higher than historic average income, and thus the attendant questions about the ability to continue to generate the same levels. Figure 3 below helps place that question into context. It is noted that these aggregate values may not represent individual farm cases well, but the point is that recent USDA forecasts of income have been reported in some cases as simply "reductions in income". While true relative to recent few years, it is also true that the reductions are to levels that are above the historical averages in constant 2014 dollars. Whether this level matches well with market participants' views of income is also debatable, but the general pattern of income through time remains important to appreciate, whatever the cause and potential effect.
Another feature sometimes underappreciated in making comparisons to the 1980s is the dramatically different nature of crop insurance and the degree to which its use can reduce income variability and shortfalls in poor production years. Figures 4 and 5 below help to better understand the role of crop insurance and its use to protect expected revenue. Figure 4 shows the acres of corn insured through time from 1989 to present. Importantly, the modern crop insurance programs expanded to include revenue coverage later in the period - a product that did not exist in the 1980s when only rudimentary version of APH yield insurance existed, and only at low coverage levels. Figure 5 completes the story showing the increase in average coverage levels that occurred through time as well. The impacts of these accrue in various ways, but perhaps can be summarized in the experience of 2012 when the corn and soybean crop suffered enormous drought damage, yet incomes remained high and there were also no major calls for ad hoc disaster relief as a result of the effects of insurance coverage. Another meaningful interpretation is that the modern insurance programs allow a producer to put a floor under losses, and also to very reliably address risks associated with cash rents of farmland (an analog of income to the asset).