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Iowa Farmland Values Rebound After Three-Year Decline
An Iowa State University survey said the average acre of Iowa farmland rose in value by 2% in 2017, to $7,326, ending the first three-year decline in values since the agricultural crisis of the mid-1980s. The leader of the survey, Wendong Zhang, said he viewed the increase as “a temporary break in a downward adjustment trajectory.”
Land values rose because buyers bid up prices in a competition for the limited amount of land that was offered for sale during 2016. “I would not consider this a turn of the land market,” Zhang said, pointing to moribund commodity prices. “Given the rising interest rates and stagnant farm income, I would not be surprised to see a continued decline in values in the future.”
Iowa State, which has conducted the annual land value survey since 1941, said its results were similar to those of the Federal Reserve Bank of Chicago, the Realtors Land Institute, and the USDA. Land values peaked in the ISU survey at $8,716 an acre in 2013, at the end of a sustained commodity boom. The agricultural professionals who participated in the 2017 survey said high crop yields, the limited amount of land on the market, and the availability of cash and credit boosted land values. Constraining the rise were weak commodity prices, high farm production costs, uncertainty about the farm economy, and attractive alternative investments, such as the stock market.
To read a briefing paper on the ISU Land Value Survey, to see maps showing the results, or to watch a video of the news conference about this year’s survey, click here.