December 17, 2013. The recent release of the 2013 Iowa Land Value Survey Results showed that Iowa farmland increased an average of 5.1 percent from 2012. With this increase Iowa farmland now sits at a historically high statewide average of $8,716 per acre. This increase marks the 4th consecutive year in which Iowa farmland has seen an increase in value. Additionally, the survey results coincide with recent surveys produced by the Federal Reserve Bank of Chicago and the Iowa Chapter of the Realtors Land Institute.
Although Northwest Iowa reported the highest average land values at $10,960 per acre, this actually represented a decrease of $445 (3.9 percent) from 2012. O’Brien County showed the highest dollar decrease in 2013 of $478. Osceola, Dickinson and Lyon counties along with O’Brien County all shared the greatest percentage decrease in 2013, with 3.72 percent.
Michael Duffy, an Iowa State economics professor and extension farm management economist who conducted the survey, stated that “the 2013 land value survey shows a market in flux, with strong and weak price sales occurring at the same time.” Additionally, Duffy suggests that “the key question is if this shows the market is going to settle, if it is just pausing before another takeoff in values, or if the market has peaked and due for a correction.”
Even though Iowa’s statewide average for farmland has reached historic highs, some experts have concerns about the continued growth in values. Factors that could contribute to slow demand for agricultural land include concerns about decreasing commodity prices as well as the EPA’s current proposal to rollback the corn-based ethanol mandate in the Renewable Fuel Standards (see previous blog post here). Also, the fact that interest rates are likely to start increasing and the continued uncertainty over the passage of a new Farm Bill all could contribute to slowing demand for agricultural land. For more information contact Goosmann Law at info@goosmannlaw.com or by calling 712.226.4000.