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Study: Iowa farmland values decline after 5-year climb
Demand for land and record yields cushion the decrease
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Lower crop prices and high interest rates halted a five-year rise in the average farmland value in Iowa, according to Iowa State University's annual Land Value Survey released Tuesday.
Cropland still is expensive and overpriced at an average of about $11,500 per acre, the survey found, but average values declined about 3 percent from last year's record.
That mostly erases the modest price gains of last year that followed "very large surges of 29 percent and 17 percent in 2021 and 2022," said Rabail Chandio, an ISU Extension economist who presented the findings.
"So that naturally leads to somewhat of a resetting or balancing in the market," Chandio said.
It follows the trend of past cropland value surges, most recently leading into 2013. Values dived after that year but surged again after the start of the pandemic along with crop prices, at a time when loan interest rates were very low.
Corn and soybean prices began to rapidly rise in late 2020 and peaked in 2022, when corn topped $8 per bushel and soybeans eclipsed $17. Corn is now about $4.50 per bushel and soybeans are about $10.
Still, the relatively limited supply of farmland for sale and strong yields are keeping land values high, according to the survey's respondents. Average corn yields in Iowa are projected to be about 213 bushels per acre, according to the U.S. Department of Agriculture.
The survey responses came from 330 people — mostly agricultural lenders, land brokers, appraisers and farm managers — from throughout Iowa.
While the average value across the state decreased, some areas saw price gains, and about 20 percent of the state's counties had their highest values since the survey began tracking county-specific data in 1950, Chandio said. Those were mostly in south-central Iowa.
Cropland values in Linn and Johnson counties were roughly static. The average acre in Linn was estimated to be about $13,300, an increase of 0.4 percent. The Johnson County average was about $13,100, a decrease of 0.2 percent.
The most valuable farmland is in far northwest Iowa, whereas the least valuable is near the southern border.
Northwest Iowa’s O'Brien County farmland averaged nearly $16,000 per acre, according to the survey. It had the highest average corn yield of any Iowa county last year, according to ISU data. Appanoose County in southern Iowa had the lowest average value, at about $6,800. Its average corn yield was about 21 percent less than O’Brien’s and was among the lowest in the state.
The ISU survey last year predicted that land values would decrease this year, and respondents expect another decline in 2025. But they also expect values to increase 10 to 20 percent by 2029.
"The long-term outlook is very hopeful," Chandio said.
Comments: (319) 368-8541; jared.strong@thegazette.com
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