The value of an average acre of good Iowa farmland slipped 1.7 percent over the past six months, according to a new farm real estate survey.
The Iowa Chapter of the Realtors Land Institute on Tuesday reported the average acre of tillable Iowa cropland was worth $6,844 on Sept. 1 — down from $6,961 on March 1.
Survey participants, who are specialists in farmland sales and development, were asked to estimate the average sale price of an acre of bare, unimproved land on a cash basis.
Combined with the 2.9 percent increase reported on March 1, however, the value of an average acre of Iowa farmland increased 1.2 percent from Sept. 1, 2017, to Sept. 1, 2018.
Troy Louwagie of Hertz Real Estate Services in Mount Vernon was not surprised by the recent survey results.
“We saw an increase in the spring and last fall, but I was expecting a decrease with these results,” Louwagie said. “One of the reasons that I feel land prices have stayed up is the low supply of land for sale.
“We have seen a lot of growth, expansion and development around Cedar Rapids, North Liberty and Iowa City. We have seen a lot of investors buying farmland and I feel that has kept the land market up through the summer months.
“As we move into fall, I see a large amount of land coming up for sale.”
ARTICLE CONTINUES BELOW ADVERTISEMENT
A rezoning request being considered by the Cedar Rapids City Council is an example of that kind of growth and development.
The council on Tuesday had the first reading of an ordinance rezoning 73.2 acres of farmland at 16th Avenue and 80th Street SW from agricultural to planned unit development.
BNKD Development of Waverly and the owner of the farmland, the Lawrence A. Schulte Trust, are requesting the change to use 15 acres for single-family homes, 25.5 acres for multifamily housing and 95 acres for commercial mixed use development.
The land is located just east of where Highway 100 will connect with Highway 30.
In the farmland survey, the nine Iowa crop reporting districts showed variability in average farmland values. The results varied from a 0.7 percent increase in northeast Iowa to a 3.9 percent decrease since March 1 in the west central area of the state.
The average value of an acre of farmland in east central Iowa slid 2.3 percent from March 1 to September 1.
Continuing lower corn and soybean prices, limited amount of land on the market, tariffs and world trade agreements, and increasing interest rates were cited by survey participants as major factors negatively affecting cropland values.
Other contributing factors include tight operating capital, alternative investments, cash on hand and corn and soybean yields.