Iowa Land Values 2023
2023 Iowa Farmland Values and Trends
Even though Iowa farmland values slowed in 2023, the persistent climb of land values set new records. The number of farms for sale in 2023 fell from the year prior in 2022, and the narrow supply of land was met with lots of interested buyers, which should keep a firm level of support to land prices.
The Price of an Acre of Land In Iowa
The average cost of an acre of land in Iowa is $11,835. According to Rabail Chandio, Assistant Professor of Economics at ISU, there was a 3.7% rise from 2022 but that increase isn’t as high as the 7% increase in 2022 or the 29% rise in 2021. While there’s been a value increase, it has slowed down. Chandio delivered the results of the 2023 Iowa Farmland Value Survey at a news conference in December.
The southeast district costs an average $10,460 per acre, a 12.8% gain. Chandio stated since this area of the state possesses more recreational land, this is what helped to increase the price.
Land in Southern Iowa also saw a large increase in land values from 2022 to 2023. Land investors are seeking “fixer-upper” farms in this area. Limited supply across the state is one of the issues supporting values. Working capital, good commodity prices, and higher-than-expected yields helped, as well.
Chandio feels the land market reached a plateau in which the prices stayed flat or declined. Even with climbing interest rates and falling agricultural income, Iowa farmland values still rise in 2023. However, the growth rate slowed. The 2023 ISU survey showed increases of 17% in 2022 and 29% in 2021. Iowa farmers who are considering selling their land might want to act soon. Chandio predicts that values might start to drop in the upcoming year.
“While good influences were more noticeable at the start of the year, negative pressures are building as 2024 nears,” said Chandio. “Excluding any uncommon activity in the land markets, we may see the curve begin to weaken in the next year or so.”
The Reason Iowa Land Values Increase and Decrease
Another critical result from the 2023 Land Value Survey indicated that many of the reasons for land value surges continued in 2023. Studying the crop district level values, for the first time in a few years, the northwest district stated a decrease in land values of 0.84%. All the other crop reporting districts indicated an increase with South Central at 12.6% and Southeast at 9.6%. Factors that increased the land values include:
- Limited Land Supply
- Higher Commodity Prices
- More Cash On Hand
- Higher Than Expected Yield
- High Credit Availability
Credit and cash stayed available, granting farmers the opportunity to remain aggressive in the land market. Additionally, both local and outside investor demand was strong.
There are still sufficient reserves from good farm incomes from the last couple of years due to high government payments, greater commodity prices at the beginning of this year, and the compelling demand from non-local and local investors as well as the farmers. The demand is strong and has been a significant factor in sustaining the land market.
The Impact of Higher Interest Rates
Imminent rate increases will continue to reduce the growth in farmland values, but not right away. The Federal Reserve has increased a major interest rate four times this year to reduce inflation. The Fed has hinted at rate cuts beginning in 2024, but that is yet to be determined.
It takes a few years for interest rates to be revealed in farmland values,” Chandio said. “The effect of the hard-hitting interest rate hikes of 2022 is anticipated to be felt more sharply in 2024 and beyond, causing modest growth or even reductions in land values in the future.”
Interest rate hikes are still the chief negative concern for the second year in a row and the outcome is being capitalized somewhat in the existing land markets, decreasing the pace of increase. Regardless of these difficulties, most people feel the land values will stay firm with the anticipation of an increase or remain the same with a few individuals thinking that there will be a reduction somewhere between 5 to 10%.
Other Impacts That Impact Iowa Farmland Values
One factor that is driving higher values is a limited supply of Iowa farmland. And thanks to four years of increasing net farm income, Iowa farmers have the chance to purchase land. Chandio stated that the survey results showed that “Although the farm income forecast for December 2023 foresees a reduction from 2022 levels, the net farm income in 2023 stays over 30% greater than the 2020 level.”
The Future of U.S. Farm Income
The 2023 Land Value Survey results indicated U.S. farm income is anticipated to drop 17.4% this year from a record amount in 2022. This includes lower livestock and crop prices as well as greater production costs.
Iowa is expected to follow U.S. income trends. The current data showed that Iowa farm income grew 44% to $15.3 billion in 2021. Iowa has the country’s second-largest agricultural economy.
The Data About Iowa Counties
The survey showed that land values increased in 87 of Iowa’s 99 counties. Northwest Iowa’s Sioux County was number one on the list with a cost of $16,521 per acre. At the bottom of the list was south central Iowa’s Decatur County with $6,286 per acre.
When it comes to the biggest dollar increase, Marion County topped the list at $1,117 per acre. The biggest dollar decrease occurred in eastern Iowa’s Scott County with an acre priced at $630.
After a substantial increase in 2021 and 2022, the market regarding land for sale in Iowa in 2023 has leveled off. Chandio confirmed these findings: “We continue to see a battle between growing interest rates attempting to pull the market lower while solid net farm incomes help the market to stay supported at today’s values.”
By Iowa Land Company
The Future of Iowa Farmland
Don’t let the 2023 Land Value Survey hinder you. Iowa farmland is still a treasured asset. Solid liquidity merged with increasing farmland values has inspired Iowa farmers with equity and capital to balance the results of a continuously shifting market. Email us to schedule a consultation to learn more about selling and buying Iowa farmland.
Free Broker’s Opinion of Value or Farmland Appraisal
If you are interested in knowing what your Iowa property is worth, we offer a free broker’s opinion of value report for land in all 99 counties across the state. Get in touch with the broker that services the territory your property is located in by calling (515)962-5048 or emailing info@iowalandcompany.com If you would like a certified appraisal contact us today, we will be happy to put you in touch with an Iowa Land Company certified appraiser.
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.
* Some information was obtained from the Iowa State University 2023 Farmland Value Survey*
