2002 IOWA LAND VALUE SURVEY: OVERVIEW

Prepared by Michael D. Duffy, agricultural extension economist, and Darnell Smith, research associate, Iowa State University, December 18, 2002.

1.0 History and Purpose of the Land Value Survey.

1.1 The survey was initiated in 1941 and is sponsored annually by the Iowa Agriculture and Home Economics Experiment Station, Iowa State University. Only the state average and the district averages are based directly on the ISU survey data. The county estimates are derived by using a procedure that combines the ISU survey results with data from the U.S. Census of Agriculture. The survey was conducted by Michael Duffy and Darnell Smith.

1.2 The survey is intended to provide information on general land value trends, geographical land price relationships and factors influencing the Iowa land market.

1.3 The survey is based on reports by licensed real estate brokers and selected individuals considered to be knowledgeable of land market conditions.
Approximately 1100 surveys are mailed each year. Normally 500-600 completed surveys are returned. The 2002 survey is based on 591 usable responses.

1.4 Participants in the survey are asked to estimate the value of high, medium and low grade land in their county. Comparative sales and other factors are taken into account by the respondents in making these value estimates.

2.0 Analysis by State.

2.1 The 2002 state average for all grades of land was estimated to be $2083 per acre.

2.2 The increase in the state value was $157 per acre from 2001.

2.3 The percentage increase was 8.2 percent from 2001.

3.0 Analysis by Crop Reporting District.

3.1 The highest land values were reported for East Central Iowa, $2547 per acre.

3.2 The lowest land values were estimated for South Central Iowa, $1211 per acre.

3.3 The greatest percentage increase was in South Central Iowa, 16.6 percent.

3.4 The least percentage increase was in North Central Iowa, 5.7 percent.

4.0 Analysis by Counties.

4.1 The highest value was estimated for Scott County, $3379 per acre.

4.2 The lowest value was in Decatur county, $823 per acre.

4.3 The greatest dollar increase was $581 in Jones county.

4.4 The greatest dollar decrease was $-165 in Audubon county.

4.5 The greatest percentage increase was 29.5 percent reported in Des Moines County.

4.6 The greatest percentage decrease was $-8.7 percent in Ringgold County.

5.0 Analysis by Quality of Land.

5.1 Low grade land in the state averaged $1,322 per acre and showed a 13.0 percent increase or $152 per acre.

5.2 Medium grade land averaged $1,924 per acre and showed a 8.8 percent increase or $156 per acre.

5.3 High grade land averaged $2,576 per acre and showed an increase of 7.0 percent or $169 per acre.

6.0 Major Factors Influencing the Real Estate Market.

Survey respondents listed both positive and negative factors influencing the land market. The respondents listed multiple factors in most cases.

6.1 There were seven positive factors listed by more than 10 percent of the respondents.

6.2 Lower interest rates were the most frequently listed positive factor identified by 52 percent of the respondents.

6.3 Other positive factors were: government payments (33 percent), crop yields (28 percent), improving commodity prices (24 percent), stock market declines (17
percent), scarcity of listings (15 percent), and strong investment demand (14 percent).

6.4 There were 4 negative factors listed by over 10 percent of the respondents. Poor commodity prices in general (14 percent), farm economy variability (13 percent), general economic outlook/world conditions (13 percent), and uncertainty and problems with the government programs (11 percent).

7.0 Number of Sales Compared to Previous Year.

When asked to compare the number of sales in 2002 relative to 2001, 28 percent reported more, 49 percent the same, and 23 percent reported less.

8.0 Land Sales by Buyer Category.

The 2002 survey asked respondents what percent of the land sales were sold to four categories of buyers.

8.1 The majority of farmland sales: 58 percent were to existing farmers. Investors represented 37 percent of the sales. New farmers represented 2 percent of the sales and, other purchases were 3 percent of sales.

8.2 Sales to existing farmers by Crop Reporting Districts ranged from 72 percent in Northwest to 40 percent in South Central.

8.3 Sales to investors were highest in South Central (48 percent). Southeast reported the lowest investor activity (25 percent).

9.0 Interpretation of Survey Results.

The results of this year’s survey are some of the most unusual since the survey was started. The variability in the survey results has not been seen in previous years’ surveys. In addition, there are no discernable patterns for increases or decreases as found in previous years. In this survey some counties are up considerably while a neighboring county may not be up at all.

The survey showed the third year of increases in average land values following the two years of decline. The survey showed an increase in all the crop reporting districts but 19 of Iowa’s counties actually reported lower land values in 2002 compared to 2001. The average 2002 value is the second highest ever recorded in Iowa history. Adjusting the values for inflation, however, shows that the values are similar to what they were prior to the rapid increases in the 1970s.

The 2002 survey also shows the highest investor interest in purchasing farmland. There are many reasons for this including the low interest rates and the poor performance in
the stock market. This might be part of the reason for the wide variability in reported values.

It is also interesting to note that there was no dominant negative factor as in years past. The respondents talked about factors that were more local in nature. The average 8.2 percent increase in land values is in line with one of the other surveys of Iowa land values. It is important to remember the different time periods covered when comparing surveys. The Iowa State University survey reported here is an annual survey as of November 1, 2002.

We examined the data to try and determine the cause for the extreme variability. The number of respondents is similar to what we have had in the past. Similarly there is no
difference in the percentage of new respondents in a county or region. Overall 84 percent of the respondents answered the questionnaire last year.

The data do not reveal a particular reason for the unanticipated results. Investor demand varies considerably and this demand lends itself to more variability than traditional farmer demand. There are certain physical factors such as rights-of-way that can create unique demand situations that can vary from county to county. It is also possible that a particular county may have more aggressive bidders influencing the local land values. Finally, a plausible explanation is that as we approach peaks in land values greater variability can reflect alternative attitudes about future directions.

 

Table 1. Recent Changes in Iowa Farmland Values

  Value Per Acre Dollar Change Percentage Change

1967

397

42

12.0

1968

409

12

3.0

1969

419

10

2.5

1970

419

0

0.0

1971

430

11

2.6

1972

482

52

12.0

1973

635

154

31.9

1974

834

199

31.3

1975

1,095

261

31.3

1976

1,368

273

24.9

1977

1,450

82

6.0

1978

1,646

196

13.5

1979

1,958

312

19.0

1980

2,066

108

5.5

1981

2,147

82

3.9

1982

1,801

-346

-16.1

1983

1,691

-110

- 6.1

1984

1,357

-334

-19.8

1985

948

-409

-30.2

1986

787

-161

-17.0

1987

875

88

11.2

1988

1,054

179

20.4

1989

1,139

85

8.1

1990

1,214

75

6.6

1991

1,219

5

.4

1992

1,249

30

2.5

1993

1,275

26

2.1

1994

1,356

81

6.4

1995

1,455

99

7.3

1996

1,682

227

15.6

1997

1,837

155

9.2

1998

1,801

-36

-1.9

1999

1,781

-20

-1.1

2000

1,857

76

4.3

2001

1,926

69

3.7

2002

2,083

157

8.2

 

Table 2. Average Value Per Acre of Iowa Farmland Listed by Crop Reporting Districts and Grades of Land

Year 

State Average

Northwest 

North Central 

Northeast 

West Central

 

Central

East Central

Southwest 

South Central 

Southeast

 
All Grades

1981

2147

2562

2721

2227

2056

2538

2530

1586

1184

1790

1986

787

937

912

786

768

930

1000

607

403

705

1987

875

1084

1055

835

871

1044

1053

676

421

782

1993

1275

1618

1507

1176

1326

1542

1433

961

643

1166

1995

1455

1755

1724

1330

1528

1766

1676

1102

742

1367

1996

1682

2071

1997

1559

1758

2090

1965

1206

851

1502

1997

1837

2263

2194

1721

1894

2295

2110

1369

957

1580

1998

1801

2174

2119

1757

1820

2192

2123

1373

948

1585

1999

1781

2059

2073

1807

1837

2128

2118

1346

981

1570

2000

1857

2198

2169

1868

1924

2195

2190

1412

992

1655

2001

1926

2240

2240

1950

1969

2246

2324

1511

1039

1705

2002

2083

2434

2367

2149

2101

2392

2547

1632

1211

1808

 

High Grade

1981

2759

3035

3209

2885

2576

3061

3293

2050

1880

2726

1986

1048

1131

1094

1048

1000

1154

1343

832

682

1120

1987

1150

1306

1260

1102

1125

1288

1399

912

688

1229

1994

1760

1972

1871

1651

1859

2010

1995

1347

1092

1938

1995

1869

2058

1968

1729

1939

2159

2131

1483

1163

2091

1996

2151

2431

2300

2015

2210

2558

2518

1586

1316

2291

1997

2328

2647

2531

2210

2350

2790

2673

1786

1443

2383

1998

2284

2534

2449

2238

2268

2659

2683

1798

1455

2369

1999

2249

2401

2362

2275

2288

2589

2685

1773

1499

2271

2000

2324

2547

2462

2329

2375

2660

2743

1825

1509

2353

2001

2407

2588

2546

2439

2437

2685

2907

1947

1582

2447

2002

2576

2776

2676

2625

2583

2848

3105

2117

1931

2539

 

Medium Grade

1981

1931

2252

2334

2052

1866

2279

2258

1472

1149

1604

1986

699

830

777

709

684

813

866

561

396

622

1987

780

957

903

754

776

928

925

630

413

696

1994

1223

1511

1420

1127

1316

1478

1387

936

652

1085

1995

1322

1598

1558

1216

1394

1580

1510

1009

726

1210

1996

1514

1873

1769

1423

1585

1843

1752

1111

829

1321

1997

1668

2033

1945

1577

1742

2050

1910

1280

945

1404

1998

1638

1970

1885

1604

1670

1968

1930

1274

924

1414

1999

1629

1876

1869

1665

1692

1898

1945

1241

949

1433

2000

1701

2001

1972

1728

1772

1956

1996

1320

955

1511

2001

1768

2057

2040

1800

1807

2013

2125

1410

1004

1571

2002

1924

2278

2142

2010

1930

2175

2358

1522

1152

1659

 

Low Grade

1981

1157

1460

1517

1220

1125

1336

1366

959

624

752

1986

377

488

468

405

350

475

460

290

176

257

1987

432

571

553

444

419

535

495

341

207

289

1994

714

882

935

668

752

914

808

555

348

503

1995

792

992

1049

737

812

967

925

614

400

574

1996

936

1213

1207

878

981

1146

1073

688

479

674

1997

1042

1354

1337

992

1083

1279

1186

787

544

730

1998

1030

1299

1286

1059

1021

1258

1205

792

542

739

1999

1045

1216

1314

1110

1040

1296

1188

798

582

790

2000

1117

1370

1387

1167

1126

1299

1288

862

597

875

2001

1170

1388

1423

1208

1202

1416

1404

918

623

871

2002

1322

1571

1568

1448

1332

1516

1628

996

760

997

 

Level of Sales Activity, 2002

Crop Reporting District

More

Same

Less 

Percent

Northwest

32

53

15

North Central

36

41

23

Northeast

25

57

18

West Central

26

42

32

Central

26

51

23

East Central

31

43

27

Southwest

14

58

28

South Central

19

57

24

Southeast

36

42

22

State

28

49

23

 

Iowa Land Purchases, 2002

 

Existing Farmers

Investors

New Farmers

Other

Percent

Northwest

72

27

1

1

North Central

69

28

2

1

Northeast

63

37

1

1

West Central

62

38

1

2

Central

51

45

3

1

East Central

59

34

4

5

Southwest

63

35

2

1

South Central

40

48

2

10

Southeast

68

25

2

6

  State

58

37

2

3

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