Updated December, 2023
File C2-70

2023 Farmland Value Survey Iowa State University

The Iowa State University Land Value Survey was initiated in 1941 and is sponsored annually by Iowa State University. Only the state average and the district averages are based directly on Iowa State University survey data. County estimates are derived using a procedure that combines Iowa State University survey results with data from the US Census of Agriculture. Since 2014, the survey has been conducted by the Center for Agricultural and Rural Development in the Department of Economics at Iowa State University and Iowa State University Extension and Outreach.

The survey is intended to provide information on general land value trends, geographical land price relationships, and factors influencing the Iowa land market. The survey is not intended to provide a direct estimate for any particular piece of property.

The survey is an expert opinion survey based on reports by licensed real estate brokers, farm managers, appraisers, agricultural lenders, county assessors, and selected individuals considered to be knowledgeable of land market conditions. Respondents were asked to report for more than one county if they were knowledgeable about the land markets. The 2023 Iowa State University Land Value Survey is based on 417 usable county-level land value estimates provided by 282 agricultural professionals.

Of the 282 respondents, 41% completed the survey online. Online responses allow participants to provide estimates for up to 12 counties. The CARD Farmland portal facilitates the visualization and analysis of Iowa farmland values, pooling data from Iowa State University, the United States Department of Agriculture, Federal Reserve Bank of Chicago, and the REALTORS® Land Institute, as well as making use of charts over time and interactive county maps.

Participants in the survey are asked to estimate the value of high-, medium-, and low-quality land in their county. Comparative sales and other factors are taken into account by the respondents in making these value estimates. This survey is the only data source that provides an annual land value estimate at the county level for each of the 99 counties in Iowa. In addition, this survey provides estimates of high-, medium-, and low-quality land at the crop reporting district and state level.

The 2023 state average for all quality of land was estimated to be $11,835 per acre as of November 1, 2023 (Figure 1). This is an increase of $424 per acre from Nov. 1, 2022, and a 3.5% increase (Table 1).

figure 1

 

table 1

Major Factors Influencing the Farmland Market

Most survey respondents listed positive and negative factors influencing the land market. Of all respondents, 90% listed at least one positive factor, and 86% listed at least one negative factor. In most cases, respondents listed multiple factors.

There were three positive factors listed by over 50% of respondents who provided at least one positive factor. The most frequently mentioned factor was limited land supply, mentioned by 15.5% of respondents. Strong yields and the combination of cash on hand and credit availability were the next most-frequently mentioned positive factors, mentioned by 12.6% and 12.1% respondents, respectively. Other frequently mentioned positive factors included higher commodity prices (11.3%) strong land demand including from investors (11.3%), a good farm economy (5.4%), and a recent history of favorable interest rates (2.8%).

There were also three negative factors listed by more than 40% of respondents who identified at least one negative factor. The most frequently mentioned negative factor affecting land values was the series of interest rate hikes over the past two years, mentioned by 23.4% of respondents, and the fall of commodity prices during 2023 was the second-most important concern with 22.7% responses identifying it. Concerns about higher input costs, weather uncertainty, and stock market volatility and economic uncertainty were the next most frequently mentioned negative factors, mentioned by 11.4%, 7.2%, and 5.1% of respondents, respectively. Land availability and uncertainty in agricultural profitability were each mentioned by roughly 3.6% of respondents.

Number of Sales Compared to Previous Year

In 2023, 39.5% of respondents reported fewer sales relative to 2022, which signals the slowing place of the land market. On the other hand, 21% reported more sales, and 39.5% reported the same level of sales in 2023 compared to 2022.

Land Sales by Buyer Category

The survey asked respondents what percent of the land was sold to six categories of buyers: existing local farmers, existing relocating farmers, new farmers, local investors, non-local investors, or other.

The majority of farmland sales, 70%, were to existing farmers, of which existing local farmers captured 69% of land sales. Only 1% of sales were to existing relocating farmers. New farmers represented 4% of sales. Investors represented 24% of land sales, with 12% going to local investors and 12% to non-local. Other purchasers were 2% of sales.

Land Sales by Seller Category

The survey also asked respondents what percent of land was bought from six categories of sellers: active farmers, retired farmers, estate sales, local investors, non-local investors, or other.

The majority of farmland sales, 57%, were from estate sales, followed by retired farmers at 23%. Active farmers accounted for 7% of sales, while local and non-local investors accounted for 4% and 7%, respectively.

Estate sales by crop reporting district ranged from 40% in the South Central district to 70% in the West Central district.

Sales by investors were highest in the South Central district (24%), with local investors representing 10% of sales and non-locals representing 14%. The Northeast and East Central districts reported the lowest investor sale activity (6% each), with local investors representing 2% and 3% of sales and non-locals representing 4% and 3%, respectively.

Respondents by Occupation and by Mode of Survey

The survey asked the main occupation of the respondent: farm manager, appraiser, agricultural lender, broker/realtor, government, farmer/landowner, and other, along with the respondents’ number of years of experience and the number of counties in which they offer services.

In total, 282 agricultural professionals completed the survey, providing 417 county land value estimates. Of these 282, agricultural lenders represented the largest group, accounting for 41% of all respondents. Brokers/realtors and farm managers were the next largest groups, representing 14.2% and 13.1% of respondents, respectively.

Of all respondents, the percentage of agricultural lenders ranged from 25% in the Southwest district to more than 45% in the Northwest, Northeast, West Central, and Southeast districts.

Our respondents, on average, have 27 years of experience in their current profession and offer professional services to an average of six counties. While government officials typically only serve one county, appraisers, agricultural lenders, farm managers, and realtors/brokers offer services, on average, to 15, 10, 10, and 4 counties, respectively.

The survey was completed online by 41% of the 282 respondents.

Farmland Value and Cash Crop Price Predictions by Respondents

This year’s survey asked respondents to predict land values and cash crop prices one and five years from now, as well as the prevailing interest rates for a 20-year farmland mortgage and a one-year operating loan.

Respondents had optimistic views regarding the strength of the farmland market five years from now, and generally expect stable or even higher land values, with the one year expectation tilting towards a fall in land values. Forty-eight percent of respondents forecasted a decrease in their local land market in one year, while 30% expected a higher land value and 22% forecasted no change. While the most popular response was for the one-year land price forecast to decrease by 5% or less, the second-most popular answer was for land values to remain the same as the current situation. Looking five years ahead, 16% of respondents forecasted a decline, much smaller than the 48% forecasting a decline 12 months from now. Meanwhile, 70% of respondents expect an increase in land values in the long term, with an increase of 10%–20% selected by most respondents.

To better gauge the respondents’ views of current farmland values, the survey also asks them to rate the current farmland values in their primary county as way too low, too low, just right, too high, or way too high. Fifty-nine percent and 10% of respondents think the current land values are too high or way too high, respectively, while only 5% of respondents think the current land values are too low. Twenty-five percent of respondents think the land values are just right.

Respondents expect corn and soybean cash crop markets to remain relatively stable. In particular, the predicted state average cash corn prices for November 2024 (one year from now) and 2028 (five years from now) are $4.69 per bushel and $5.33 per bushel respectively. The statewide average soybean price predictions are $12.42 per bushel in one year and $13.36 per bushel five years from now.

Respondents reported typical interest rates for 20-year farmland mortgages and one-year operating loans are 7.59% and 8.54%, respectively. These are significantly higher than one-year-ago levels due to the multiple interest rate hikes by the Federal Reserve to combat inflation.

Land Quality and Corn Suitability Rating 2

To gauge how each respondent defined high-, medium-, and low-quality land for their county, we asked for estimated average CSR2 (Corn Suitability Rating 2) for high-, medium-, and low-quality land. We also asked for estimates of the percent of land area for each land quality class.

Approximately 90% of participants provided at least one CSR2 estimate for the corresponding land quality classes. The estimated average CSR2 values statewide for high-, medium-, and low-quality land are 83, 70, and 56 points, respectively. The estimated percent of land area for high-, medium-, and low-quality land is 35%, 40%, and 25%, respectively.

In addition, respondents ranked high-, medium-, and low-quality land based on relative conditions in their region. For example, the average CSR2 for high-quality land in the South Central district is 72, which is only slightly larger than the CSR2 for low-quality land in the Northwest district (70).

table 2

Interpretation of the 2023 Survey Results

The 2023 Iowa State University Land Value Survey reported a 3.7% increase to $11,835 per acre for average Iowa farmland values from November 2022 to November 2023. This represents a modest increase from last year, and the $11,835 per acre nominal land value is the highest-ever recorded by the survey. The 2023 nominal land value is 36% higher than the 2013 peak in nominal land values, and the inflation-adjusted value, $9,131 per acre in 2015 dollars, saw a 0.5% increase and is also the highest on record.

The declining rate of increase in land values, along with falling values in select regions, is revealing a possible plateauing in the land market. The downward pressures on land values are largely attributable to interest rate hikes, lower commodity prices, increasing input prices, and weather uncertainty. At the same time, limited land supply, stronger-than-expected crop yields, readily available cash and credit, higher commodity prices earlier in the year, strong demand, including from investors, and a good farm economy supported the overall growth in Iowa land values. In general, nearly half of the respondents expect modest declines in land values within the next year but are optimistic about the future of the land market, forecasting increases in five-year land values.

The 2023 Iowa State University Land Value Survey revealed a geographic pattern in land value changes across crop reporting districts, counties, and land quality classes. Land values increased in eight of the nine crop reporting districts, with the largest percentage increases in the South Central and Southeast districts, 12.8% and 9.6%, respectively. All other districts reported increases less than 5% except for the Northwest district, where land values decreased by 0.8%. Across land quality classes, low-quality land saw the greatest increase, 4%, while high- and medium-quality land experienced 3.5% and 3.8% increases, respectively.

Within the districts, high quality land decreased in value by 1.1% in the Northwest district, medium- quality land value decreased in the East Central district by 0.1%, while low-quality land values fell in the Northwest, Northeast, Central, and East Central districts by 0.8%, 1%, 0.1%, and 4.2%, respectively.

Twelve of Iowa’s 99 counties reported decreases in nominal land values and 45 counties reported a decrease in inflation-adjusted values, but 87 counties still report the highest nominal land values since 1950, and, for 42 counties, the inflation-adjusted values are also record-high–topping the previous peak in 2013. The largest percentage increase, 12.9%, was reported in Appanoose, Decatur, Lucas, and Wayne counties while the largest percentage decreases were reported in Scott and Clinton counties at 3.9% and 1.9%, respectively.

In general, the results from the 2023 Iowa State University Land Value Survey are similar to the results from other surveys, which all continued the surging farmland market trends due to higher commodity prices and limited land supply. In November 2023, the Federal Reserve Bank of Chicago reported no change in Iowa‘s “good” farmland values from October 2022 to October 2023. In September, the REALTORS® Land Institute reported an overall 0.6% increase in Iowa cropland values from September 2022 to September 2023. The US Department of Agriculture June Area Survey reported a 21.4% rise in Iowa‘s agricultural real estate values (land and building) from June 2022 to June 2023.

Nearly 40% of respondents reported less sales in 2023 relative to 2022, another 39% reported the same level of sales, while only 21% reported more sales compared to 2022. Limited land supply is reported as the most common factor selected as a positive influence on land values.

The majority of farmland sales, 70%, were to existing farmers, of which existing local farmers captured 69% of land sales. Only 1% of sales were to existing relocating farmers. New farmers represented 4% of sales. Investors represented 24% of land sales, with 12% going to local investors and 12% to non-local. Other purchasers were 2% of sales.

The farmland value estimates from the Iowa State survey are average estimates for all farmland in a county, which includes cropland as well as pasture, CRP, and timberland. Specifically, we asked respondents to estimate "farmland value for average-sized farms in your county as of November 1, 2023."

An opinion survey is just that–it represents the collective opinion of the survey respondents. Most of the respondents will use actual sales to formulate their opinions but each person can choose to weigh or discount particular sales as they deem necessary. The Iowa State Land Value Survey is an opinion survey, as are the surveys conducted by Federal Reserve Bank, USDA, and the REALTORS® Land Institute. It is important to consider the survey respondents, the questions asked, the time period covered, and other factors relating to a particular survey. As a result, it is important to note that when comparing results across surveys for Iowa and neighboring states, it is better to compare percentage change over time as opposed to dollar amount per acre.

The Iowa State Land Value Survey is intended to provide information on general land value trends and factors influencing the Iowa land market, it is not intended to provide a direct estimate for any particular piece of property. We recommend interested buyers or sellers hire an appraiser to conduct a formal appraisal of a particular parcel, go to county assessor websites, or examine recent auction results for comparable parcels in their region.

Outlook for Land Values

The slowing pace of the growth in Iowa farmland values is not really a surprise for some – in November 2022, over 30% of the 2022 Iowa State survey respondents thought land values in their territory would either remain the same or modestly increase in 2023. The small increase of 3.7% falls within that expectation. On the other end of the spectrum, nearly 70% of the respondents believe that land values are higher than they should be and about 50% expect a decline in the next year. This is explained by the downward pressures by rising interest rates, lower commodity prices, and higher input costs.

According to USDA Economic Research Service’s December 2023 farm income forecast, US net farm income is forecast to decrease $31.8 billion (17.4%) from 2022 levels to $151.1 billion in 2023 (in inflation-adjusted terms, a 20% fall). Despite the decline, US net farm income in 2023 is higher than the 2020 net farm income by 38%, and its 20-year average (2003–2022) by 36%. The decrease is driven by falling commodity prices and cash receipts from farming, along with lower direct government payments and higher production costs. In particular, both crop receipts and animal or animal product receipts are expected to decrease by 4% and 5%, respectively. Even though the direct government payments continue to fall, the 2023 direct government payments are forecasted at $12.1 billion, reflecting the reduction in COVID-related assistance in 2023. As farm production expenses are rising, with the largest increases this year coming from interest expenses, the growth in expenses has caught up to the growth in revenues, making for tighter margins.

There have been three ‘golden’ eras for Iowa land values over the past 100 years. The first one ended in a long, drawn-out decline in land values from 1921 to 1933, the second golden era ended with a sudden collapse from 1981 to 1986. The third golden era ended with an orderly adjustment in values from 2014 onwards as opposed to a sudden collapse. We are now at the cusp of another great period of farmland values, and if the economy bypasses a recession as planned, we should be able to end this era without a rapid collapse in land values.

More details on the survey can be found on the CARD website, and historical data can be downloaded in the AgDM Decision Tool Historical Farmland Values Data, or in AgDM File C2-72, Historical Farmland Values.

table 3

figures 2-3

2023 Iowa Farmland Value Survey -- Extension web site dedicated to the ISU Land Value Survey, including information from the 2023 news conference and the presentation by Dr. Rabail Chandio

2022 Iowa Farmland Value Survey -- Extension web site dedicated to the ISU Land Value Survey, including information from the 2022 news conference and the presentation by Dr. Wendong Zhang

2021 Iowa Farmland Value Survey -- Extension web site dedicated to the ISU Land Value Survey, including information from the 2021 news conference and the presentation by Dr. Wendong Zhang

2020 Iowa Farmland Value Survey -- Extension web site dedicated to the ISU Land Value Survey, including information from the 2020 news conference and the presentation by Dr. Wendong Zhang

2019 Iowa Farmland Value Survey -- Extension web site dedicated to the ISU Land Value Survey, including information from the 2019 news conference and the presentation by Dr. Wendong Zhang

2018 Iowa Farmland Value Survey -- Extension web site dedicated to the ISU Land Value Survey, including information from the 2018 news conference and the presentation by Dr. Wendong Zhang

2017 Iowa Farmland Value Survey -- Extension web site dedicated to the ISU Land Value Survey, including information from the 2017 news conference and the presentation by Dr. Wendong Zhang

2016 Iowa Farmland Value Survey -- Extension web site dedicated to the ISU Land Value Survey, including information from the 2016 news conference and the presentation by Dr. Wendong Zhang

2015 Iowa Farmland Value Survey -- Extension web site dedicated to the ISU Land Value Survey, including information from the 2015 news conference and the presentation by Dr. Wendong Zhang

2014 Iowa Farmland Value Survey -- Extension web site dedicated to the ISU Land Value Survey, including information from the 2014 news conference and the presentation by Dr. Mike Duffy.

2013 Iowa Farmland Value Survey -- Extension web site dedicated to the ISU Land Value Survey, including information from the 2013 news conference and the presentation by Dr. Mike Duffy.

2012 Iowa Farmland Value Survey -- Extension web site dedicated to the ISU Land Value Survey, including information from the 2012 news conference and the presentation by Dr. Mike Duffy.

2011 Iowa Farmland Value Survey -- Extension web site dedicated to the ISU Land Value Survey, including information from the 2011 news conference and the presentation by Dr. Mike Duffy.

2010 Iowa Land Value Survey -- Extension web site dedicated to the ISU Land Value Survey, including information from the 2010 news conference and the presentation by Dr. Mike Duffy.

 

Rabail Chandio, extension economist, 515-294-6181, rchandio@iastate.edu

Author

Rabail Chandio

extension economist
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