Rise of land values is slower

   Iowa’s farmland values rose again, albeit at a slower pace than the last two years.

   The annual Iowa State University Land Value Survey found that farmland values increased 3.7 percent or $424, to $11,835 per acre. The modest increase this year follows a 17 percent increase in 2022 and a near-record 29 percent increase in 2021.

   The nominal value of an acre of farmland is again higher this year than at any point since Iowa State began surveying values in 1941. When adjusting for inflation, the 2023 average value surpasses 2022’s inflation-adjusted values by 0.5 percent.

   Rabail Chandio, an assistant professor and extension economist at Iowa State, said many of the factors behind the large surge in values last year supported the increase this year as well.

   “Interest rates were lower through the first half of the year, commodity prices were still elevated, crop yields were a positive surprise despite the weather challenges throughout the growing season, cash and credit availability remained ample and allowed farmers to stay aggressive in the land market, and investor demand grew stronger nudged by inflation concerns and lack of alternative investment options,” she said.

   The Federal Reserve has used interest rate hikes to help curb inflation rates that ballooned from mid-2021 through 2022; however, Chandio said that the pace of those hikes has been tempered.

   “The goal is to control inflation without triggering a recession, a strategy that has proven successful in 2023, and we hope to see maintained stability through 2024,” said Chandio, who manages the survey.

   Chandio also noted farmers having ample cash reserves as an influence on land values this year. She attributed farmers’ recent accumulation of cash reserves to high net farm incomes.

   “Although the farm income forecast for December 2023 anticipates a decrease from 2022 levels, U.S. net farm income in 2023 remains over 30 percent higher than the 2020 level and the 20-year average (2003-2022),” she said.

   “The combination of debt-free ownership of most land, substantial farm incomes, and limited land supply means that farmers still maintain significant cash reserves.”

Land Values by County

   Eighty-seven of Iowa’s 99 counties showed an increase in land values.

   Jones County was actually one of the ones that showed a decrease, from $11,991 per acre in November 2022 to $11,801 in November 2023.

   Sioux County topped the list of increases this year with a per-acre value of $16,521, an increase of $5 per acre, or 0.03 percent, relative to 2022. Decatur County again reported the lowest value, $6,286 per acre; however, Decatur County saw land values increase 12.9 percent, or $720 per acre, which tied with Appanoose, Wayne and Lucas counties as the largest  percent increase.

   Marion County saw the largest dollar increase, at $1,117 per acre. Scott County saw the largest dollar decline in values (a loss of $630/acre) as well as the largest  percent decline in values (-3.9 percent).

Land Values by Quality

   Statewide, low-quality land now averages $7,664 per acre, an increase of 4 percent or $296 per acre.

   Medium-quality land now averages $11,075 per acre, an increase of 3.8 percent or $401 per acre. High-quality land now averages $14,296 per acre, an increase of 3.5 percent or $479 per acre.

   Iowa State’s Land Value Survey is conducted in November by the Center for Agricultural and Rural Development at Iowa State and ISU Extension and Outreach. It is based on reports by agricultural professionals knowledgeable of land market conditions, such as appraisers, farm managers, agricultural lenders and actual land sales, and is intended to provide information on general land value trends, geographical land price relationships and factors influencing the Iowa land market.

   The 2023 survey is based on 417 usable responses from 282 agricultural professionals. Forty-one  percent of the 282 respondents answered the survey online.

   The Center for Agricultural and Rural Development at ISU offers a web portal at https://www.card.iastate.edu/farmland/ that includes visualization tools, such as charts and interactive county maps, allowing users to examine land value trends over time at the county, district and state level.