Kyle Hansen
LIMITED SUPPLY: “Farmers and investors both have a strong interest in expanding farms or buying land for investment,” says Kyle Hansen. “But there isn’t much land being offered for sale. Our latest survey shows increases in farmland value for all types — low-, medium- and high-quality land.”

Land value survey indicates “bleeding” has stopped

Iowa farmland values appear to be taking a breather to identify future direction.

The three-year downtrend in Iowa farmland values appears to have ceased, at least temporarily, according to a survey of ag realtors released March 22. The average value of Iowa farmland shows a statewide increase of nearly 1% for tillable cropland values from September 2016 to March 2017. Combining this 0.9% increase with the 3.7% decrease reported in September 2016 indicates a statewide average decline of 2.8% for the past 12 months.

“Looking at the nearly 1% increase for the past six months, it appears the bleeding has stopped,” says Kyle Hansen, a realtor Hertz Real Estate Services. He coordinates the survey, conducted twice a year by the Iowa Chapter of Realtors Land Institute. 

Iowa’s nine crop reporting districts show a mix of increases and decreases in average land value in this latest survey. The districts varied from a 3.2% increase in northwest Iowa to a 3% decrease in southwest Iowa since September 2016.

First increase in nearly 4 years
The average value for tillable farmland in Iowa as of March 1 is $6,545 per acre. That compares to $8,690 in the March 2013 survey. Values rose slightly for six months afterward and then began declining in the fall of 2013. “March 2017 is the first time our survey has shown an increase in Iowa’s average value for cropland since September 2013,” says Hansen.

Factors affecting current farmland values include good yields in 2016, lower commodity prices, limited amount of land on the market, and high world supplies of grain. Other factors include lack of stable alternative investments, cash on hand, stronger dollar, threats to trade policy, political uncertainty and increasing interest rates.

Today’s land market is a flat-line or sideways type of trend, Hansen says. Prices are going up in situations where there is strong competition for land and holding steady in other cases. Corn and soybean exports remain strong, and interest rates remain low, although there is concern as to whether those factors will change.

Real estate agents say there is very little land being offered for sale. With that in mind, farmers who have saved their money are bidding on land when the opportunity arises. Roger Johnson, a realtor with Farmers National Co. at Cedar Falls, says this is the most competition he’s seen for land in 20 years. About 75% of the bidders are farmers and 25% are investors in his area of northeast Iowa.

Increase in number of investor-buyers
John Hjelm, a realtor with The Acre Co. at Spencer in northwest Iowa, says the past year has seen an increase in the number of investor-buyers compared to farmer-buyers. And the investors are outbidding the farmers, he adds.

Strong investor interest and good yields in most of Iowa last year have increased the number of bidders, real estate agents say. On the downside, low crop prices, a slight rise in interest rates, low net farm income and government uncertainty are factors holding farmland prices down.

“The average price of farmland in our latest survey wasn’t up in all parts of the state,” notes Hansen. “Prices vary significantly from sale to sale. The future is difficult to predict, but it will depend on production and crop prices.”

Summing up: For the first time in over three years, the average value of Iowa farmland has increased, but not by much: less than 1% since September. It’s a mixed bag for different areas of the state, from north to south, with some gains and some losses. Northwest Iowa tillable cropland rose 3% in value, but southwest Iowa land slipped that much.

Many buyers — farmers as well as investors — have a strong interest in expanding their farms or buying land for investment. The latest survey of Iowa farm realtors, conducted as of March 1, shows increases in value for all types of cropland: low-, medium- and high-quality land. The percent change in tillable cropland average values for the past six months for the state’s nine crop reporting districts are:

• Central Iowa up 2.7%
East Central up 1.1%
North Central down 0.5%
Northeast up 2.6%
Northwest up 3.2%
South Central up 2.3%
Southeast up 1.3%
Southwest down 3.0%
West Central down 2.0%
• State average up 0.9%

The Iowa Realtors Land Institute farmland value survey has been conducted in March and September each year since 1978. For information, visit rlifarmandranch.com.

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