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Survey Shows Continued Drop In Iowa Farmland Values

Land Falls 30% From 2013 Peak

DES MOINES, Iowa -- It’s not just commodities prices that are down.

Iowa farmland enters this year’s harvest season with nearly a 4% drop in market value.

In its latest survey released Wednesday, the Iowa Chapter of Realtors Land Institute showed a statewide decrease in cropland values of 3.7% for the March 2016-to-September 2016 time frame.

Participants in the survey were asked for their opinions about the current status of Iowa’s farmland market. They were also asked to estimate the average value of farmland as of September 1, 2016. Estimates are for bare, unimproved land with a sale price on a cash basis.

Combining this decrease with the 5.0% decrease reported in March 2016 results in a statewide average decrease of 8.7% since September 1, 2015.

Since the peak of 2013, Iowa land values have dropped between 25% and 30%, according to the Realtors Land Institute.

Randy Hertz, chairman of Hertz Real Estate Services, told Thursday that he is still surprised by how strong the market is right now.

“There has been a lot of spin about how low commodities prices are. And certainly they are down a lot more than farmland values. But what is impacting the farmland market is that there isn’t a lot of land for sale,” Hertz says.

Hertz adds, “If you want to buy a farm, you have to shop hard for the location and the quality you want.”

High-quality farms have held their values pretty well, Hertz says. “Whereas, farms with issues such as nontillable, rough land, irregularly shaped, and or poorly erosive areas have had a bigger value adjustment.”

All nine Iowa crop reporting districts showed a decrease in the average farmland value. The districts varied from a -2.4% decrease in the south-central district to a -5.8% decrease in the southwest district since March 2016.

Factors contributing to current farmland values include lower commodity prices and a limited amount of land on the market. Also having an effect are the lack of stable alternative investments, amount of cash on hand, and increasing interest rates.

David England, vice president of Farm and Ranch Management for Farmers National Company, a Nebraska-based company, says he is encouraged that land values are falling slowly vs. rapidly.

“The slow decrease is creating more stability in the market,” England says. But we’re not seeing that huge crash like we saw in the 1980s that created a lot of problems in the farming community in the way of net worth losses.”

England added, “I think we will continue to see land prices fall until we get into a period of increased crop prices.”

In the chart below, each region shows the drop in land value from September 2015 to March 2016, the drop from March 2016 to September 2016, and the bottom number shows the total. In other words, the bottom number for each region shows how much land values have gone down since September 2015.


Source: Iowa Chapter of Realtors Land Institute


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