Business

Iowa farmland values fall for fourth year

Low commodity prices, interest rates cited

Nov. 1 figure represents a 3.3 percent decline in farmland values from a year earlier. (George C. Ford)
Nov. 1 figure represents a 3.3 percent decline in farmland values from a year earlier. (George C. Ford)

Iowa farmland values have declined for the fourth time in the past five years, according to a new Iowa State University survey.

The value of an average acre of all qualities of Iowa farmland dipped 0.8 percent, to $7,264, on Nov. 1, from $7,326 on Nov. 1, 2017.

In terms of inflation-adjusted farmland prices, the Nov. 1, 2018, figure represents a 3.3 percent decline from a year earlier.

The average price of an acre of all qualities of Iowa farmland on Nov. 1 represents a 17 percent decline from $8,716 in 2013, the peak year in nominal land values, or a 24 percent drop in inflation-adjusted values.

Wendong Zhang, assistant professor in the ISU Department of Economics who prepared the survey, attributed the latest decline largely to lower commodity — corn, soybean and wheat — prices, higher interest rates and, to some extent, the trade disruptions brought about by the Trump administration tariffs.

“The magnitude of the decline is still very modest and overall the land market is largely stable,” Zhang said in a news release.

“Many respondents cited limited land supply, strong yields and low interest rates as positive factors influencing the land market.

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“Two-thirds of the respondents reported no change or less sales compared to a year ago. In general, the survey respondents have an optimistic view regarding the strength of the future land market both one and five years from now.”

Five of nine crop reporting districts reported an increase in land values. The largest percentage increase was in south-central Iowa at 3.8 percent, while central Iowa recorded a 2.4 percent decline and southeast Iowa reported a 3.6 percent loss.

East-central Iowa reported an average value of $8,004 per acre on Nov. 1, down 2.6 percent from Nov. 1, 2017. The average value of an acre of farmland in northeast Iowa was unchanged at $7,543.

Seventy of the 99 counties in Iowa reported a drop in land value, while the other 29 counties recorded an increase.

The average value of an acre of Linn County farmland slipped to $8,720 on Nov. 1, 2018, from $8,748 on Nov. 1, 2017. In Johnson County, the value of an average acre of farmland dipped to $8,676 on Nov. 1, 2018, from $8,769 on Nov. 1, 2017.

The results of the latest ISU land value survey in general echo the findings of other recent farmland value surveys.

Last month, the Federal Reserve Bank of Chicago reported a 1 percent decline in Iowa‘s “good” farmland values from July 1, 2018, to Oct. 1, 2018. In September, the Realtors Land Institute reported a 1.7 percent drop in Iowa cropland values from March 2018 to September 2018, which represented an overall 1.2 percent decline from September 2017 to September 2018.

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