2020 Reclaimed Equity - Iowa Farmland Futures

By: Iowa Land Company

2020 Reclaimed Equity – Iowa Farmland Futures

 

2020 was a record year in many asset classes throughout America. The S&P 500 stock index returned a gain of 17.88% with dividends calculated in. The Dow Jones Index gained a consistent 9.70% with dividends calculated in. Commodities ran course in like kind with the markets, with a slight lag in timing, but ultimately they pushed higher. Early 2021 has shown strength in both the stock market and farmland market. One is global and one is a strategy as we deal with farmland sellers and buyers daily. Understanding the current farmland market can be tough in a quick moving market like we have seen in the past 6 months. Let us share some insight on Iowa farmland futures and the trajectory of the market.

 

 

2020 Land Value Recap

 

In our sector, farmland can be tough for a client to read between the lines and there are always two sides to every coin. The overall value of farmland stands at $7,559 per acre statewide. This was a 1.7% increase from 2019 but, still below the peak 2012 value where the average price of farmland was at $8,716 per acre statewide. It is fair to say in the past 90 days on quality farmland is up 4-5% in some areas of the state. This is great for farmland owners in Iowa along with farmers throughout the state. Land is a farmer’s biggest asset class, and when land goes up a farmer’s borrowing power tends to trend with it. Understanding leverage is key for both farmland sellers and buyers. Market timing is key when trying to capitalize if one decides to sell farmland. Now would be a great time to sell because 2020 reclaimed equity on farmland. 2020 Iowa State Survey Recap 

 

 

Montgomery County Iowa Farmland Values

 

 

Strong Demand For Farmland

 

The current market shows strong demand for Iowa farmland. The emotion of buying farms can be exciting for land buyers and is an opportunity to extend the family legacy and carry on the family business. Grain prices are on a multi-year high with farm incomes project to rise. The prior two years, farmers were presented with significant aid from the federal government during the China – United States Trade War. 2021 seems to show signs of pull back on government funding from trade-war retaliations. On top of the additional federal payments and rising commodity prices, interests rates tanked to historical record lows. Covid-19 in the spring forced the feds to back off on rates to continue purchase potential to stimulate the economy. This put life back in rural America. Farmer’s attitudes have been much better towards buying farmland due to the 2020 reclaimed equity. 

 

 

Capitalize On The Market

 

We recently saw farmland sales in multiple counties hit close to if not record prices in Iowa. The lack of farmland available has pushed prices to 5 year highs. Quality farmland is trading fast selling the best on auction. It wasn’t long ago when land auction attendance was low and buyer activity was bleak. Some guys were passing on farms due to decline in commodity prices and higher interest rates. In today’s era, most quarter sections fetch north of $1,000,000. A sudden increase or decrease in farm interest rates can cheapen a farm up or increase the cost of that property. When buyers are most active and most eager to buy is when rates are low and grains are up. It is the perfect time to sell Iowa farmland. 

   

Our advice to sellers sitting on the fence is to keep and eye on the market, interest rates, and commodity prices. Farmland is priced at a point now where a sudden shift in any of the three could strip equity out of the asset. Location=s where we have seen limited land on the market in 24 months is reflecting record prices. Farmland buyers and investors are seeking farmland. If you are looking for additional insight or considering selling a farm reach out to Iowa Land Company. We can work with you through your current situation and advise on maximizing value. Our no obligation consultations are free of charge. We are Iowa trusted advisors. 

 

 

 

 

 

 

 

 

 

 

Iowa Land Company is a full-service farmland auction company that services in all 99 counties of Iowa. We transact all types of land in Iowa. Want to know what your land in Iowa is worth ? Get a | Free Farmland Evaluation (Click) | from one of the trusted agents at Iowa Land Company.

 

Contact Us



    IOWA FARMLAND AUCTION COMPANY

    Our company was built to generate Iowa land transactions combining two things, land marketing experience and farmland sales experience. Our marketing company and land salesman are focused on Iowa dirt! Iowa Land runs deep within each person that makes up our company. We have a  passion for land and that’s what we know. Each person has their strengths and we mesh those strengths together forming a land company that is powerful in both land auctions and private treaty land sales.

     

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    Farm Location

    Location can be the biggest variables when calculating land value so it’s important to not over look this step.
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    CSR2 Value

    Yes we certainly do consider your Corn Suitability Rating (CSR2) value when giving our traditional farm appraisal because it is very important.
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    Improvements

    We want to hear your story. How has the farm been taken care of? Who has farmed the farm? Etc…
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    Current Market

    We look at what is currently on the market, how long similar farms have been on the market, for what price and how that farm compares to yours.
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    Recent Sales

    We have access to our in farm sales report that we file per county. We keep a close eye on recent farms located near your farm.
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