A new Iowa State University survey reveals farmland values in the state rose 2.3 percent over the past year, despite the trade disputes and declining income.
The increase was only the second in six years, according to the survey, but still represents a 15 percent decrease from the 2013 peak in average land values, or a 23 percent drop in inflation-adjusted values.
Low interest rates, strong yields and a limited amount of available land helped boost the statewide average to $7,432 an acre, said Wendong Zhang, an Iowa State assistant economics professor.
While the recent ISU survey indicates farmland values are up 2.3 percent statewide, the average price in Jackson County is $6,721 per acre - a $20 decrease per acre – down from $6,741 per acre a year ago.
That’s “very minimal and reflects a flat and rather stable market,” according to Chuck Schwager, licensed real estate broker at East Iowa Real Estate.
Schwager said it is difficult to pinpoint an exact number on changing farm values because land sales are stagnant right now.
“I think the biggest factor for land values not moving much are profits in the farming industry,” Schwager continued. “Commodity prices and cash on hand have much to do with land-buying decisions. Most of the land is still being purchased by farmers who are investing in their future.”
In the eastern Iowa crop reporting district, which includes, Benton, Linn, Jones, Jackson, Iowa, Johnson, Cedar Muscatine and Scott counties, the average price per acre increased by 5.9 percent, thanks to land values in Johnson County increasing to $9,041 per acre, and Scott County –the highest land ag land values in the state, increasing to $10,837 per acre in value.
“This recent modest increase in land values reflects a lower interest rate environment and slowly improving U.S. farm income. However, we are still faced with significant uncertainty, especially the ongoing U.S.-China trade war, which has significantly affected agricultural exports, especially soybean exports, and lead to lower commodity prices and weaker farm income,” Zhang said. “Stronger-than-expected crop yields in Iowa and continuing limited land supply helped contribute to the increase in land values, despite low commodity prices.”
Eighty-two of Iowa’s 99 counties reported higher land values, the remaining 17 all saw a decline. For the seventh consecutive year, Scott and Decatur counties reported the highest and lowest values, respectively. Decatur County reported a value of $3,586 per acre, a gain of $97, or 2.8 percent. Scott County reported a value of $10,837 per acre, a gain of $300, or 2.8 percent.
Land values were determined by the 2019 Iowa State University Land Value Survey, conducted in November by the Center for Agricultural and Rural Development (CARD) at Iowa State University and Iowa State University Extension and Outreach. Results from the survey are consistent with results by the Federal Reserve Bank of Chicago, the Realtors Land Institute, and the US Department of Agriculture.
The ISU land value survey was initiated in 1941, the first in the nation, and is sponsored annually by Iowa State University. Only the state average and the district averages are based directly on the ISU survey data. The county estimates are derived using a procedure that combines the ISU survey results with data from the US Census of Agriculture.