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Survey: Iowa farmland values up 18.8% since March

Farmers are paying more for farmland in 2021, Iowa RLI says

Iowa farmland values have increased 18.8% from March to September, the Iowa Chapter of the Realtors Land Institute (RLI) reported September 29.

The Chapter surveyed participants who are specialists in farmland and are asked for their opinions about the current status of the Iowa farmland market. Participants were asked to estimate the average value of farmland as of September 1, 2021. Members of the Iowa Chapter of RLI are surveyed twice per year. Information is gathered on farmland quantified as either high-, medium-, or low-quality tillable; pastureland, and rangeland. Furthermore, the state is broken up into the nine crop reporting districts.

In summary, the September 1 survey shows land values increased:

  • 14.2% in northwest
  • 20.7% in north-central
  • 22.5% in northeast
  • 16.6% in west-central
  • 18.4% in central
  • 21.9% in east-central
  • 19.7% in southwest
  • 17.1% in south-central
  • 18.2% in southeast

That’s just from March to September. “Year over year, the survey shows a 26.6% increase in farmland values across the state,” says Matt Vegter, real estate salesman at Hertz Real Estate Services of Nevada, Iowa, and member of the Iowa Chapter of RLI. “That’s pretty hefty for Iowa ag land.”

Two other farmland surveys support the Iowa RLI data. The Chicago Federal Reserve Bank of Chicago’s August farmland survey shows the average price of “good” Iowa farmland increased 18% from July, 2020 to July 2021. And, Farm Credit Services of America respondents indicate the average price paid for Iowa farmland has increased 13% in the last year.

Suffice to say, prices paid for land at farm auctions are soaring, Vegter says. “There are three drivers: the huge rally in corn and bean prices, plus 2021 crop yields are surprising.”

Interest rates are historically low, and farmland buyers also are concerned about inflation, he adds.

Proposed changes to estate taxes have prompted some sellers to move quickly.

“In March, 2021 we had a lack of supply. The last 30 days and the next 60 days, however, that has changed drastically. Many sellers are motivated to sell it and get the transaction closed by the end of the year,” Vegter explains.

He notes that farmers are primary buyers, although investors are becoming more competitive and willing to spend more money than they had a year or two ago.

Timber and pasture acres showed similar strength, boasting a 15.9% increase to timberland values and a 14.1% increase in pastureland values across the state.

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