Land Value Trends Across the U.S.: Iowa

Overall, the various land value opinion surveys in Iowa have pointed to 1-2% higher to perhaps 1-2% lower in some areas, depending on timing of the survey ( Stock Image )

This analysis is provided by Dennis Reyman AFM, ARA

Iowa’s crops are predicted to set new records this year. It looks like the middle 1/3rd of the state has had the best run of weather all year and will see the highest yields. The northern side was very wet earlier while the southern side has been quite dry. However, better hybrids and improved management practices will bring on a great crop that has developed ahead of normal. 

We’re coming into the “selling season” for farmland in western Iowa. Normally, about 75% of the public land sales occur in the second half of the year, with each month gaining sales volume into early December. Most non-family or non-tenant transactions are by public auction. Consider that a truer test of this market area than non-exposed transactions. A search of “cropland only” sales in mid-August indicated more activity than the previous two years up to that point; expect that trend to continue for the rest of the year. 

Another item is acres per transaction is lower. With basically steady prices on good land, that means that total dollars per transaction is also down by roughly 10%. It is common practice to offer larger parcels as bidder’s choice of the unit, or one or more subdivided parcels. While the appetite to purchase additional land is strong, economic caution is leading many to prefer smaller purchases with smaller financial commitments. Farmers typically buy about 75% of the cropland available, with non-farmers or private investors accounting for most of the balance. Government or quasi-government agencies are often buyers of non-cropland. 

Good land is selling for $10,000 per acre or more in the traditionally strong neighborhoods, while good land in other areas may bring $8,500 to $9,500 per acre. A lot of that difference has to do with drainage requirements and the long-term influence of livestock. In fact, mid-August sale search showed 40% of “cropland only” sales at $10,000 or more. Sellers are not seeing the $20,000 per acre sales in Sioux County (livestock central) which made headlines a few years ago, but a few still top $15,000 in that area.   Smaller parcels and the need for manure application space are strong drivers in that area and others. 

Overall, the various land value opinion surveys in Iowa have pointed to 1-2% higher to perhaps 1-2% lower in some areas, depending on timing of the survey. Basically, a pretty steady market unless the farm is below average in productivity or consistency. There is occasionally some “bidder’s exhaustion” for the last parcel of a multi-parcel sale. The last parcels are usually the poorest parcels, but they can comparatively sell for less than a single-parcel offering of similar land. 

Comments