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Iowa farmland tops $10,000/acre

Jeff Caldwell 10/08/2012 @ 12:59pm Multimedia Editor for Agriculture.com and Successful Farming magazine.

Iowa farmland is now, on average, worth $10,000/acre.

A year ago, farmland values were climbing at a double-digit clip in Iowa. While that's still true in parts of the state now, the climb has dipped as experts continue to speculate whether factors, both macroeconomic and ag-specific, are continuing to turn the tide in a market that's seen nothing but upside the last few years.

High-quality crop land ranged from over $10,000/acre for the first time since the Iowa Chapter #2 Realtors Land Institute (RLI) has kept track of land values, according to the most recent RLI survey released recently. The west-central and northwestern parts of the state led the charge, with values of $11,475 and $11,908/acre, respectively. The southwestern part of the state, which saw values jump from $8,823 to $10,083/acre, saw the largest rate of gain at 10.8%, the survey shows.

"The results of the survey show a statewide average increase of 7.7% for cropland during the March 2012 to September 2012 time frame. This, in combination with the previously reported 10.8% increase during the spring months, gives a statewide average increase of 18.5% for the year," says Cannon Clark, business development specialist with Peoples Company, a land brokerage firm based in West Des Moines, Iowa. "The statewide average for high quality crop land is now $10,445 per acre, the highest it has ever been since the survey was begun in 1987."

Though the numbers are still trending higher, Clark says a few variables are starting to slow the rise in values. The recent survey conducted with land brokers shows that concerns about factors both local to agriculture and on a macroeconomic level are keeping values from climbing at a steeper clip.

"RLI stated contributing factors being strong commodity prices, favorable long term interest rates, and a limited supply of land currently on the market," he says. "Different concerns that were brought up among several of the experts included higher input costs, a possible increase in interest rates, and continued uncertainty of the U.S. and World economy."

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Can you say Farmland bubble! 10/16/2012 @ 3:59pm The people who are paying these prices are going to get hurt really bad financially. I don't think our government should bail them out either - its their own fault for paying 30 - 40 times the average annual return to land. Very foolish indeed, but its all propped up by FCS who will loan huge amounts of money to any farmer with a pulse. Farmers around here are borrowing their brains out to buy land. I keep reading in the trade publications that these are all cash deals. I don't believe it based on what I see around here people are stretching and theirs lot's of debt piling up right now as farmers borrow heavily to chase overpriced land. What's the floor after this bubble pops? If interest rates go up just 200-300 bps we're talking at least $1K an acre loss in value. Farm margins are getting squeezed, RFS is under attack, huge grain supply increases in SA, decreased farm subsidies, what could go wrong?

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Re: Re: Can you say Farmland bubble! 04/13/2013 @ 10:57pm And my revised guess on the impact of 200-300 bps increase in interest rates is more like 3-4K off the land price BTW. Don't forget the impact on the operating loans!

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Re: Re: Can you say Farmland bubble! 04/13/2013 @ 10:54pm Updated post. Make that 50 - 60 times annual return to land (pre-tax) as of Q1-2013. Insane! This is going to end very badly.

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10/09/2012 @ 2:17pm You must not be doing it right! Chad

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Dumb 10/08/2012 @ 9:52pm Really dumb to pay that much anyone who does I hope they fail badly.

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