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Iowa land values slide; is it the start of a new trend?

Agriculture.com Staff 03/11/2009 @ 8:02am

A decade-long climb in the value of Iowa farmland is over. That's according to a survey released Tuesday by the Iowa Realtor's Land Institute (RLI).

The RLI semiannual land values survey, conducted with farm managers and lenders around the state, showed a decline in land values of 7.6% on average statewide. The survey breaks land into low-, medium- and high-quality categories; the low-quality category saw the greatest decline at 9%, while high-quality land was down 6%.

Sliding grain prices, profit losses in the livestock sector and increasing crop input costs are the main drivers of the decline.

It's another sector that's seemingly being affected by the economic downturn, but the land value decline isn't a bad thing, farmers say. Some say slumping prices represent opportunity, while others say they're not seeing declines just yet, so they're staying on the sidelines for now.

"Keep your powder dry. There are a lot better opportunities down the road, in my opinion," writes Agriculture Online Farm Business Talk member dapper7.

There are longer-term implications to lower farmland values in today's economy, others say. With the federal goverment pumping money into the banking sector, inflation may rear its head as the economy starts to recover and more money is circulating through the economy. If that happens, land could be a safe investment for farmers, some say.

"We've seen the stock market, the housing market and oil prices collapse, so don't be too sure that land prices are always going up," writes Farm Business Talk member centralillinois. "On the other hand, some economists feel that inflation could accelerate and land is the best inflation hedge."

But, despite RLI numbers showing a slide in Iowa land values, not everybody's seeing lower land prices. So, if the trend in land values has reversed, it may be some time before prices are lower, especially in areas where competition remains tight for land for sale.

"Eighties that are flat, black and rectangles are still selling high, from what I've heard," says Farm Business Talk member bertfarm. "Always helps if the location is where there is competition."

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A decade-long climb in the value of Iowa farmland is over. That's according to a survey released Tuesday by the Iowa Realtor's Land Institute (RLI).

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