Farmland Insider: Eastern Iowa farmland brings $26K (with an asterisk)
At first glance, the $26,000 per acre selling price for farmland in Johnson County, Iowa, is eye-popping. But there is more to this October 6 land sale than just farmland.
Up for grabs were two 80-acre tracts, lying “on top of each other” for a swath of land .5 mile wide and 1 mile long. The tracts totaled 152.57 acres of tillable land, with a CSR 2 rating of 93.4.
“This was extremely high-quality farmground in an extremely good location,” says broker Troy Louwagie with Hertz Ag, which had the sale.
The cherry on top of this real estate sundae however, was the south tract, Parcel 2. Containing mostly Klinger silty clay loam soils and nearly table-top flat, the south 40 acres of the 77.05-acre tract is zoned for residential/multifamily housing. It’s contained within the Swisher city limits, a suburb of Cedar Rapids.
With that cherry as a caveat, the tract sold to a developer for $26,000 per acre.
“The developer will be building houses in the next year or two,” says Louwagie. “It was a heck of a selling price, but there was more to it.”
However, lest you think the other tract was a slouch, it certainly was not.
The north tract, Parcel 1, has 77.05 acres of tillable land, with mostly Klinger and Clarion soils and a CSR 2 of 93.10. It sold for $21,000 per acre to a farmer who had participated in a 1031 Exchange, which helped drive the price, Louwagie says. However, land in this area does not come up for sale often. With cities to the north, a reservoir to the south, and an interstate to the east, potential buyers know that when land comes up for sale, it will be hotly contested.
“Not much sells in this area. We had very active bidding,” he says.
The seller was a man who owned it for two decades, had retired and decided it was time to liquidate.
Farmland prices are staying strong due to better-than-expected crop yields, a lot of federal dollars coming to farmers, and pent up cash from the pandemic. However, he expects some land value plateaus as farmland supply catches up with demand.
“It depends on how much ground is sold in a given area,” he explains. “In every neighborhood there are three to five guys who can write a check for farmland.” When those well-heeled buyers run out of cash, expect softening to occur.