Hulst land auction sign
PEAKING OUT? Several factors support the current farmland market, while others, such as low commodity prices, are hurting values.

Local values can differ widely

While the farmland market across Iowa remains stable, big differences in bids exist on land of comparable quality.

From neighborhood to neighborhood, there are ranges in value for the same quality land. Many factors influence local values including the number of recent land sales, influence of local livestock production, and recent crop production results. The highest-quality farms from a production standpoint (highly productive soils, solid fertility and drainage, and high “farm-ability”) continue to outperform those farms with poorer soils, waterways or other obstructions.

Across Iowa, there is also interest in farmland from both local and non-local investors. Some are seeking diversification for their overall investment portfolios; others are seeking to complete 1031 tax-deferred exchanges after having sold land in more urban areas.

The investor interest in buying land provides additional market depth and stability on top of the more typical interest from local farmers. Even though there is growing expectation that interest rates will be moving higher in 2018, long-term borrowing rates remain very low, and this fact is supportive to the current farmland market. 

While there are several supportive influences on the current farmland market, there are also offsetting influences that are pressuring farmland values. Primarily, low commodity prices and several consecutive years of weak on-farm profitability continue to keep a lid on land values.

In addition, some local areas (or counties) have seen a spike in the number of sales in that area, which has drawn significant local capital out of the local market. Pay close attention to neighborhoods where several sales have occurred, and understand that this may be a marker for potential farmland price weakness on other upcoming sales in that area.

Thin profits for some farmers may be creating an environment where they need to liquidate a farm (or other assets) to secure operating capital. If this begins to occur on a widespread basis, the farmland market may see increasing price pressure. For landowners concerned about farmland values dropping in the future, now may be a logical time to consider selling.

NORTHWEST

Lyon County: Southeast of Rock Rapids, 82 acres recently sold at public auction for $12,250 per acre. The farm consists of 80 tillable acres with a 92.5 CSR2 on primary soil types of Galva, Colo, Primghar and Marcus. The sale equals $135 per CSR2 point on the crop acres.

NORTH CENTRAL

Butler County: Southwest of Greene, 272 acres sold at public auction for $8,600 per acre. The farm has 264 tillable acres with an 83.2 CSR2. The sale equals $106 per CSR2 point on the crop acres.

NORTHEAST

Black Hawk County: South of Waterloo, 73 acres recently sold at public auction for $12,353 per acre. The farm consists of 72 tillable acres with a 90.5 CSR2. Buyer is a local farmer and the sale equals $138 per CSR2 point on the crop acres.

WEST CENTRAL

Greene County: In Junction Township, 100 acres sold for $9,000 per acre with 97.5 tillable acres and an average CSR2 of 83.8, the sale equals $110 per CSR2 point on the crop acres.

CENTRAL

Hamilton County: In Liberty Township, 160 acres sold for $9,650 per acre. The farm has 156 tillable acres with an average CSR2 of 77.4, which equals $128 per CSR2 point on the crop acres. 

EAST CENTRAL

Benton County: West of Garrison, 129 acres sold at public auction for $9,600 per acre with 123 tillable acres and an average CSR2 of 88, that’s $114 per CSR2 point on the crop acres.

SOUTHWEST

Monona County: Near Blencoe, 139 acres sold at public auction for $6,000 per acre. The farm has 137 tillable acres with a 70.4 CSR2.  The sale equals $86 per CSR2 point on the crop acres.

SOUTH CENTRAL

Madison County: North of Patterson, 40 acres sold for $5,500 per acre. The farm has 31 tillable acres with a 61 CSR2, the balance of acres in timbered draws. The sale equals $116 per CSR2 point on the crop acres.

SOUTHEAST

Keokuk County: Near South English, 104 acres sold at public auction for $9,300 per acre with 104 tillable acres and an average CSR2 of 72.6, the sale equals $128 per CSR2 point on the crop acres. 

Hertz Real Estate Services compiled this list, but not all sales were handled by Hertz. Call Hertz at 800-593-5263 or visit hertz.ag.

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