Iowa State Land Survey Recap – Iowa Farmland Values

Today, we are going to dive into what I see “trending” in the Iowa farmland values from the recent 2018 Iowa farmland survey. Iowa State University rolls out a yearly survey from November 1st, 2017 – November 1st,  2018. This is a great survey for land buyers, landowners, and land professionals in the industry.

https://www.card.iastate.edu/farmland/isu-survey/2018/

In the beginning of the year, we saw stable farmland values across most of the region well into late summer and early fall. Following this, we started to see some “B” grade farms start to peel off. I am mentioning this due to the timing of the survey and the information that will show on 2019’s survey. Currently, we are seeing strong sales on high grade Iowa farmland. Prices in some areas of the regions are bringing well above expectations, many of these farms are operators looking to trade up in land from a “lessor” farm, for example a mid 70’s CSR2 to an 80’s and up farm which is considered high class or a “A” grade farm. This trend is leaving the mid grade farm vulnerable to price adjustment or downward pressure in many regions.  

After looking at the survey, I pulled a few key notes from the survey for the common buyer / land owner to shed some light on my view on how to read 2018’s survey.

Iowa Regional Land Values

As shown in the chart above, there are nine regions in the state that makes up the farmland market. This year, Iowa saw five regions take a negative loss on land values. Some of the losses were more than -3%. Two regions saw a straight line 0.0 percent change in year over year values. This leaves two regions that had a positive gain in year over year value. The key note on this was South Central farmland value at a gain of 3.8%. This gain helped push the entire state to relax the net loss on farmland values across the state.

Secondly, the chart above shows Iowa farmland values from 1971 – 2018. Over the years, we have seen values rise and fall depending on the year. We saw a few noticeable strings of rise and falls throughout the half decade. Pointing out, a fall in prices was the Farm Crisis of the 80’s, Iowa farmers were greatly affected by this crisis. From 1982 – 1986 we saw a 89.2 decrease in farmland values. This drawback was from multiple angles that disrupted the price of farming. The United States trade embargo against the Soviet Union was one key factor along with interest rate increases, lower commodity prices, and a stalled economy. The next 23 years we saw consistent increases in farmland values. Of the 23 years, we saw land appreciate 20 of 23 years. This leading use to the commodity boom from 2010-2013 which increased Iowa farmland values 72.1 percent, taking quality farmland values from $5064 – $8296 an acre over a 36 month span. This boom was created by global demand and drought weather across the grain belt in 2012. Following this boom, we have seen over the last 5 years commodity prices retract back to under half the levels they were in the peak era. This ultimately has pulled land values with it. The last five years we have seen a near 17 percent decrease in farmland values across Iowa. In addition, we can add another 2-3 percent reduction for the spring of 2019.  

Increase in Farmland Values

In the graph shown above, the idea is to show the increase of Iowa farmland values over the year on a visual scale. A few notes to take from this graph is that it shows you data from the last fall in 1986 to a peak of 2013 followed by the downturn in 2014. What the graph shows on a visual standpoint is a rise in recent years and that is simply not what data shows. Seen above is a correction from my point of view.

Understand that Iowa farmland is an investment play for each individual that buys Iowa dirt, whether an operator or investor buyers are looking at profitability. Investors look for ROI figures and appreciation. Farmers more angled towards expansion, appreciation, family legacy, and availability. The future is yet to be determined. A rise in commodity prices could set the stage for Iowa farmland values. Keep in mind land value will lag 18-24 months behind a commodity increase. This is my 2018 Iowa State farmland value review, until next time. May this spring offer great weather for farmers sewing their crop and a prosperous year ahead.

If you are looking to learn more about your Iowa farmland values contact Iowa Land Company today to connect with a local Land Broker. We are family owned assisting family farms.

Finding a Land Broker that takes all data into consideration is key to determining Iowa farmland values. Location, dirt quality, recent sales, and availability are all things to consider when selling a farm.