2004 IOWA LAND VALUE SURVEY: OVERVIEW

Prepared by Michael D. Duffy, agricultural extension economist, and Darnell Smith, research associate, Iowa State University, December 14, 2004.

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. The survey is not intended to provide an estimate for any particular piece of property.

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 1,100 surveys are mailed each year. Normally 500-600 completed surveys are returned.

1.4 Respondents were asked to report on more than one county if they were knowledgeable about the land markets. The 2004 survey is based on 516 usable responses providing estimates on 675 county land values.

1.5 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 2004 state average for all grades of land was estimated to be $2,629 per acre.

2.2 The increase in the state value was $354 per acre from 2003.

2.3 The percentage increase was 15.6 percent from 2003.

3.0 Analysis by Crop Reporting District.

3.1 The highest land values were reported for Northwest Iowa, $3,118 per acre.

3.2 The lowest land values were estimated for South Central Iowa, $1,547 per acre.

3.3 The greatest percentage increase was in Southwest Iowa, 17.7 percent.

3.4 The least percentage increase was in East Central Iowa, 12.5 percent.

4.0 Analysis by Counties.

4.1 The highest value was estimated for Scott county, $4,167 per acre.

4.2 The lowest value was in Decatur county, $1,104 per acre.

4.3 The greatest dollar increase was $592 in Humboldt county.

4.4 The greatest percentage increase was 22.9 percent reported in Hardin county.

5.0 Analysis by Quality of Land.

5.1 Low grade land in the state averaged $1,713 per acre and showed a 17.1 percent increase or $250 per acre.

5.2 Medium grade land averaged $2,457 per acre and showed a 15.7 percent increase or $334 per acre.

5.3 High grade land averaged $3,193 per acre and showed an increase of 14.4 percent or $403 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 6 positive factors listed by over 10 percent of the respondents.

6.2 Low interest rates were the most frequently listed positive factor identified by 45 percent of the respondents.

6.3 Other positive factors were: good crop yields (22 percent), strong investment demand (19 percent), good grain prices (18 percent), tax policy implications (15 percent) and scarcity of listings (12 percent).

6.4 There were two negative factors listed by more than 10 percent of the respondents. Lower grain prices were listed by 20 percent of the respondents. Land prices are too high and cash flow concerns were listed by 12 percent.

7.0 Number of Sales Compared to Previous Year.

When asked to compare the number of sales in 2004 relative to 2003, 33 percent reported more, 44 percent the same, and 22 percent reported less.

8.0 Land Sales by Buyer Category.

The 2004 survey asked respondents what percent of the land sales were sold to four categories of buyers.

8.1 The majority of farmland sales: 56 percent were to existing farmers. Investors represented 38 percent of the sales. New farmers represented 3 percent of the sales and, other purchases were 4 percent of sales.

8.2 Sales to existing farmers by Crop Reporting Districts ranged from 66 percent in West Central to 38 percent in South Central.

8.3 Sales to investors were highest in South Central (51 percent). Southeast reported the lowest investor activity (28 percent).

9.0 Interpretation of Survey Results.

The results of this year’s survey show that the interest in Iowa farmland remains high. This year’s average value of $2,629 is the highest ever recorded in Iowa. This is the second year in a row with a record high. When the land values are adjusted for inflation, using 1982 – 1984 time period, land values in Iowa peaked in 1979. The value reported in this year’s survey, when adjusted for inflation, is roughly the same as the value reported in 1973, the first year of the rapid run up of land values in the 1970s.

The survey also showed that the strength in the land market was apparent throughout the state. All nine crop reporting districts showed increases in the average value of greater than 10 percent. All counties showed an increase in value with an average increase of 15.8 percent. Only 8 counties reported an increase less than 10 percent.

The 2004 survey shows investor interest in purchasing farmland remained high. There are many reasons for this including the low interest rates and the poor performance in the stock market.

The average 15.6 percent increase in land values is similar to 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, 2004. It is also interesting to note that the land market did appear to be strengthening throughout the year.

The 2004 survey showed several firsts with respect to the Iowa land market. The average value is the highest recorded. This is the first time when a county average value exceeded $4,000 per acre. This is also the first time where all 99 counties reported average values above $1,000 per acre.

 

Table 1. Recent Changes in Iowa Farmland Values

  Value Per Acre Dollar Change Percentage Change

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

2003

2,275

192

9.2

2004

2,629

354

15.6

 

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

1994

1356

1663

1610

1249

1453

1653

1546

1009

673

1241

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

2003

2275

2683

2514

2347

2329

2652

2715

1774

1354

1979

2004

2629

3118

2913

2665

2728

3101

3054

2088

1547

2286

 

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

2003

2790

3040

2817

2857

2820

3121

3263

2285

2121

2783

2004

3193

3537

3265

3189

3264

3621

3659

2657

2358

3174

 

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

2003

2123

2507

2309

2221

2167

2438

2543

1659

1307

1834

2004

2457

2930

2669

2515

2564

2858

2863

1956

1492

2118

 

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

2003

1463

1808

1682

1512

1500

1707

1811

1130

858

1063

2004

1713

2087

1976

1816

1746

2028

1998

1354

1029

1272

 

Level of Sales Activity, 2004

Crop Reporting District

More

Same

Less 

Percent

Northwest

34

52

14

North Central

45

28

28

Northeast

36

41

23

West Central

31

49

20

Central

42

36

22

East Central

23

48

30

Southwest

28

61

11

South Central

27

50

23

Southeast

25

42

33

State

33

44

22

 

Iowa Land Purchases, 2004

 

Existing Farmers

Investors

New Farmers

Other

Percent

Northwest

62

34

3

1

North Central

63

35

1

1

Northeast

44

47

8

1

West Central

66

30

2

1

Central

57

40

2

1

East Central

63

30

1

5

Southwest

48

49

1

2

South Central

38

51

3

10

Southeast

60

28

2

9

  State

56

38

2

4

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