The Iowa State University’s annual land value survey released earlier this month shows prices up in every area of the state, driven by strong commodity prices, low interest rates, and other factors. Corn prices for Iowa are 60% higher than a year ago, and soybean prices are 32% higher. Iowa farmland values skyrocketed 29% this year, averaging $9,751 an acre, the highest in 80 years before adjusting for inflation, according to the new ISU survey. That’s 12% higher than the previous peak in 2013, at $8,716 an acre, ISU reported.
Most recently at a Dec. 10 auction in Sully, local Jasper County river bottom land sold for $11,000 per acre rated at mid-70s CSR.
When adjusted for inflation, this year’s farmland average fell below 2012 and 2013 values, but “This is still very, very significant,” Wendong Zhang, an ISU associate professor of economics, said about the survey. The farmland value estimates from the ISU survey are average estimates for all farmland in a county, which includes cropland as well as pasture, CRP, and timberland. Specifically, respondents were asked to estimate “farmland value for average-sized farms in your county as of Nov. 1, 2021.”
The last time Iowa’s farmland values increased more than 30% was in 2011, when they rose 32.5%. Before that, you have to go back to the 1970s, according to Zhang. On an inflation-adjusted basis, Iowa land values were still higher in 2012 and 2013, Zhang pointed out. However, this year’s 29% increase was the highest percentage gain in a decade and second biggest jump in more than 40 years.
“Survey respondents attributed the sharp jump to export-driven gains in commodity prices, better than expected crop yields, and COVID-19-related government payments,” Zhang said.
Earlier this month, a farmland auction in northwest Iowa set a record for Sioux County, with 20 acres selling for $25,100 an acre, just shy of the $26,000 state record set near Cedar Rapids in October. The price on the Cedar Rapids land may have been boosted because it lies in the path of potential development, brokers have said. The remaining 220 acres in the Sioux County sale drew $20,100 to $24,300 an acre.
Zhang said all 99 Iowa counties showed a record nominal value. In 20 counties, the prices were all-time highs even after adjusting for inflation, he said.
“Farmers can expect just about everything they need to grow next year’s crop — from fertilizer to seed to chemicals — to cost more,” said Chad Hart, an ISU agricultural economist.
“Land values also are likely to continue to rise,” Zhang said. Farmland brokers, appraisers, and other professionals surveyed by ISU concurred. Roughly 70% of this year's buyers were new or existing farmers, with investors making up nearly 30% of the market.
The state has had a record number of farmland sales this year, with land owners trying to cash in on high prices as well as being concerned about possible changes in tax laws that would leave them with a big bill.
Farmland values hit record highs across Iowa
The 2021 survey asked respondents what percent of land was bought from five categories of sellers: Active farmers, retired farmers, estate sales, investors, or other. The majority of farmland sales, 54%, was from estate sales, followed by retired farmers at 24%. Active farmers accounted for 9% of sales, while investors accounted for 10%. Estate sales by crop reporting district ranged from 66% in the northwest district to 43% in the southwest district. Sales by investors were highest in the south central district (18%). The west central district reported the lowest investor sale activity (5%).
ISU said Scott County, home of Davenport, reported the highest average value for the ninth consecutive year, rising 30% to $13,852 an acre. Decatur County, on the Missouri border, had the lowest value — though it was up sharply, rising 31.5% to $5,062 an acre.
