2001 IOWA LAND VALUE SURVEY: OVERVIEW

Prepared by Michael D. Duffy, agricultural extension economist, and Darnell Smith, research associate, Iowa State University, December 19, 2001.

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 2001 survey is based on 599 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 2001 state average for all grades of land was estimated to be $1,926 per acre.

2.2 The increase in the state value was $69 per acre from 2000.

2.3 The percentage increase was 3.7 percent from 2000.

3.0 Analysis by Crop Reporting District.

3.1 The highest land values were reported for East Central Iowa, $2,324 per acre.

3.2 The lowest land values were estimated for South Central Iowa, $1,039 per acre.

3.3 The greatest percentage increase was in Southwest Iowa, 7.0 percent.

3.4 The least percentage increase was in Northwest Iowa, 1.9 percent.

4.0 Analysis by Counties.

4.1 The highest value was estimated for Scott county, $3,233 per acre.

4.2 The lowest value was in Decatur county, $798 per acre.

4.3 The greatest dollar increase was $214 in Scott county.

4.4 The least dollar increase was $24 in Dickinson and Lyon counties.

4.5 The greatest percentage increase was 7.1 percent reported in Fremont, Jones, Mills, Montgomery, Page, and Scott counties.

4.6 The least percentage increase was in 1.2 percent in Dickinson, Lyon, O'Brien, and Osceola counties.

5.0 Analysis by Quality of Land.

5.1 Low grade land in the state averaged $1,170 per acre and showed a 4.7 percent increase or $53 per acre.

5.2 Medium grade land averaged $1,768 per acre and showed a 3.9 percent increase or $67 per acre.

5.3 High grade land averaged $2,407 per acre and showed an increase of 3.6 percent or $83 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 six 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 48 percent of the respondents.

6.3 Other positive factors were: government programs or payments (40 percent), investment demand (24 percent), crop yields (14 percent), land supply (14 percent), and farm expansion/consolidation (13 percent).

6.4 There were 3 negative factors listed by over 10 percent of the respondents. Poor markets or prices or some variation of that theme were listed by 59 percent of the respondents. The other factors were: poor economy/world conditions/Sept. 11 (22 percent) and uncertainty over government programs(20 percent).

7.0 Number of Sales Compared to Previous Year.

When asked to compare the number of sales in 2001 relative to 2000, 18 percent reported more, 51 percent the same, and 31 percent reported less.

8.0 Land Sales by Buyer Category.

The 2001 survey asked respondents what percent of the land sales were sold to four categories of buyers.

8.1 The majority of farmland sales: 67 percent were to existing farmers. Investors represented 27 percent of the sales. New farmers represented 3 percent of the sales and, other purchases were 3 percent of sales.

8.2 Sales to existing farmers by Crop Reporting Districts ranged from 74 percent in West Central to 53 percent in South Central.

8.3 Sales to investors were highest in South Central (41 percent). West Central reported the lowest investor activity (22 percent).

9.0 Interpretation of Survey Results.

The average 3.7 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, 2001.

9.1 The survey showed the second year of increases in average land values following the two years of decline. The survey showed an increase in values in all counties and Crop Reporting Districts except for the low quality land in the Southeast .

9.2 The survey respondents show in 2001 the level of investor interest in Iowa farmland remained strong but slightly lower than in 2000. The number of respondents reporting more sales in 2001 was also down slightly.

9.3 The positive and negative factors clearly summarize the current situation with respect to the Iowa farmland market. The lower interest rates and government programs exerted a strong influence on land values in 2001. On the flip side, poor commodity prices, the general economic outlook and the uncertainty over government programs provided significant negative effects on the land market. The tragedy of September 11 was a significant negative factor in the opinion of some of the respondents, but there were others who did not feel this was too negative and may even have exerted some positive effects as people looked for more secure investments.

Table 1. Recent Changes in Iowa Farmland Values

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