Iowa farmland values soar 12.9% since March 1, 32.6% in a year

With high commodity prices, historic low interest rates and little incentive to invest in equities, Iowa farmland prices continued to soar in the six months between March 1 and Sept. 1.

The Iowa Farm and Land Chapter No. 2 Realtors Land Institute on Tuesday reported that the average price of good farmland in Iowa jumped 12.9 percent in the last six months to $8,330 per acre. Combined with a 19.7 percent increase between Sept. 1, 2010, and March 1, the average price of an acre of good Iowa farmland has skyrocketed 32,.6 percent between Sept. 1, 2010, and Sept. 1, 2011.

"We're continuing to see strong interest in Iowa farmland," said Troy Louwagie of Hertz Farm Real Estate Services in Mount Vernon. "Commodity prices remain strong and we have favorable low long term interest rates, which make loans attractive. We also have continued stock market volatility, higher livestock prices and a limited amount of land offered for sale.

"Farmers and other investors know they can make 3.5 percent to 4 percent plus appreciation on farmland."

All nine Iowa crop reporting districts showed an increase. The districts varied from an 8.5 percent increase in southeast Iowa to a 17 percent jump in northeast Iowa for the six-month period between March 1 and Sept. 1.

"Here in east central Iowa, we experienced a 13.1 percent increase to an average $8,460 per acre for high quality farmland," Louwagie said. "The highest average price was $9,685 per acre in northwest Iowa. We've seen some recent farmland in that area sell for as much as $13,000 and $14,000 a acre."

The Realtors Land Institute said factors that could affect the value of I0wa farmland in the future include higher costs for seed and fertilizer, higher interest rates, more land being offered for sale and continued uncertainty about the U.S. and global economies.

The Realtors Land Institute survey has been conducted every six months since 1978. Survey participants are specialists in farmland and are asked their opinion about the current status of Iowa farmland and prices.