2009 IOWA LAND VALUE SURVEY:  OVERVIEW

Prepared by Michael D. Duffy, agricultural extension economist, Iowa State University, December 16, 2009.

(This overview is also available as a Microsoft Word document.)

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 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.

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. Typically 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 2009 survey is based on 457 usable responses providing 571 county land values estimates.

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 2009 state average for all grades of land was estimated to be $4,371 per acre.

2.2 The decrease in the state value was $97 per acre from 2008.

2.3 The percentage decrease was 2.2 percent from 2008.

3.0 Analysis by Crop Reporting District.

3.1 The highest land values were reported for Northwest Iowa, $5,364 per acre.

3.2 The lowest land values were estimated for South Central Iowa, $2,537 per acre.

3.3 The only percentage increase was in East Central Iowa, 1.1 percent.

3.4 The largest percentage decrease was in Central Iowa, 4.8 percent.

4.0 Analysis by Counties.

4.1 The highest value was estimated for Scott county, $6,361 per acre.

4.2 The lowest value was in Decatur county, $1,957 per acre.

4.3 The greatest dollar increase was $237 in Lyon county. The highest percentage increase was in Allamakee county, 5.7 percent.

4.4 The greatest percentage and dollar decrease was 6.6 percent and $384 reported in Black Hawk county.

5.0 Analysis by Quality of Land.

5.1 Low grade land in the state averaged $2,884 per acre and showed a 2.8 percent decrease or ($83) per acre.

5.2 Medium grade land averaged $4,076 per acre and showed a 2.8 percent decrease or ($119) per acre.

5.3 High grade land averaged $5,321 per acre and showed a decrease of 1.1 percent or ($60) 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 4 positive factors listed by over 10 percent of the respondents.

6.2 Low interest rates were the most frequently mentioned positive factor, being mentioned by 45 percent of the respondents. The second most frequently mentioned factor was high commodity prices, mentioned by 30 percent of the respondents. High yields were mentioned by 24 percent of the respondents, and a limited supply of land available for sale was mentioned by 20 percent of the respondents as having a positive impact on land values.

6.3 There were 5 negative factors listed by more than 10 percent of the respondents. The first three factors were identical to the top negative factors from a year ago. Declining grain prices, high input costs and the poor general economy were listed by 42, 35, and 34 percent of the respondents, respectively. The livestock losses of the past year were listed by 23 percent of the respondents and the weather was listed by 10 percent of the respondents as having a negative impact on land values in 2009.

7.0 Number of Sales Compared to Previous Year.

When asked to compare the number of sales in 2009 relative to 2008, 9 percent reported more, 29 percent the same, and 62 percent reported less.

8.0 Land Sales by Buyer Category.

The 2009 survey asked respondents what percent of the land sales were sold to four categories of buyers.

8.1 The majority of farmland sales, 72 percent, were to existing farmers. Investors represented 23 percent of the sales. New farmers represented 4 percent of the sales, and other purchasers were 2 percent of sales.

8.2 Sales to existing farmers by Crop Reporting Districts ranged from 81 percent in West Central to 62 percent in South Central.

8.3 Sales to investors were highest in South Central (32 percent). West Central reported the lowest investor activity (15 percent).

9.0 Interpretation of the Survey Results.

It is important to remember the time period when interpreting the 2009 survey results. The Iowa State University survey covers the time period from November 2008 to November 2009. Commodity prices have shown considerable swings over the past few years and the costs of production have shown wider ranges than is normal. When there is such a high degree of volatility, land value changes can vary depending on the period covered.

The Realtors Land Institute, which does a semi-annual survey, reported a 7.6 percent decrease in values from September 2008 to March 2009. However, they reported only a 1.9 percent decrease from March 2009 to September 2009. The 7th District of the Federal Reserve Board reported a 4 percent quarterly increase from July to October but a 7 percent decrease in Iowa land values from October 2008 to October 2009.

The decrease reported in the 2009 ISU survey is the first reported decline in land values since 1999. The 2009 results also mark the first time since 2004 that Iowa land values have not increased by double digits.

Not all Iowa counties experienced a decrease in value during 2009. There were 14 counties who were either unchanged or up slightly.

The change in Iowa land values is not surprising given the relative changes in crop values Iowa has experienced. The value of corn production in Iowa increased 64 percent from 2006 to 2007, but decreased 15 percent from 2007 to 2008 based on the year end summaries by the USDA. Soybeans had a 40 percent increase in the crop value from 2006 to 2007 but a 9 percent decrease in value from 2007 to 2008. We don’t know for certain the revenue for 2009 but based on prices and the difficult harvest it will probably be lower than 2008.

The percentage of respondents who reported fewer sales in 2009 relative to 2008 was the highest recorded. This was remarkable not only because of the relative value but also because of the amount of increase. In 2008, 24 percent of the respondents reported fewer sales than in 2007, but in 2009, 62 percent of the respondents reported fewer sales than in 2008. One of the respondents noted that they had one-half the number of sales.

It is difficult to say which is the cause and which is the effect when considering lower returns and fewer sales and the impact on land values. There are correlations and during 2009 the Iowa land market was impacted by both of these factors.

There appears to be a demand for the higher quality land but less so for the lower quality land. Last year was the first time we had any counties average over $6,000 per acre and the same 3 counties did so again in 2009. All counties averaged over $2,000 per acre in 2008 but in 2009 there was one county below this level. The high quality land was down only 1.1 percent whereas the medium and low quality land was down 2.8 percent.

The East Central crop reporting district was the main area showing a positive increase relative to last year. This could be due to the recovery from the flood. Other counties with a positive increase were along the Mississippi River. It should be noted that the 2008 values for four counties were revised. Adams, Adair, Clark and Taylor counties had a slight adjustment.

There was a slight increase in the amount of land purchases by existing farmers and a corresponding decrease in purchases by the investor category. These trends started a few years ago and reflect the relative strength of the farm economy and farmers tendency to convert profits into farmland. How long this trend continues remains to be seen.

The Iowa farmland market this past year can be summarized as one in which there was a marked decrease in sales activity. The demand for the higher quality land was greater than the demand for lower quality land. It was interesting this year because some people said the demand for recreational land was still very strong, others said that it was almost non-existent and others said there just wasn’t any recreational type land available.

The decrease in land values appears to have stopped. There is some indication that the values are starting to increase but it is doubtful there will be any major changes without significant changes in the overall situation. The condition of the U.S. and world economies, the returns to livestock producers, interest rates, oil prices and a myriad of other factors could come into play with respect to the change in land values. The situation has stabilized but for how long is unknown. In another survey a Nebraska lender commented, “Market is considered steady until we see an indication of change.” That sounds like a pretty obvious statement but it pretty much characterizes the Iowa land market situation today.

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

2005

2,914

285

10.8

2006

3,204

290

10.0

2007

3,908

704

22.0

2008

4,468

560

14.3

2009

4,371

- 97

- 2.2

 

Year

State
Average

North-
west
North
Central
North-
east
West
Central
Central
East
Central
South-
west
South
Central
South-
east

 

 

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
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
2005
2914
3393
3222
2963
3048
3415
3396
2350
1793
2483
2006
3204
3783
3478
3187
3410
3716
3725
2580
1927
2849
2007
3908
4699
4356
4055
4033
4529
4272
3209
2325
3463
2008
4468
5395
4950
4590
4823
5280
4743
3626
2573
3913
2009
4371
5364
4827
4464
4652
5026
4796
3559
2537
3832

 

 

 

 

 

 

 

 

 

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
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
233
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
2005
3511
3813
3588
3522
3691
2925
4069
2925
2659
3385
2006
3835
4261
3834
3816
4072
4263
4443
3209
2663
3793
2007
4686
5313
4807
4859
4804
5261
5073
3989
3231
4625
2008
5381
6150
5514
5415
5725
6076
5674
4642
3586
5346
2009
5321
6129
5371
5349
5552
5939
5738
4539
3710
5306

 

 

 

 

 

 

 

 

 

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
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
3120
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
2005
2736
3199
2982
2834
2833
3165
3172
2217
1725
2347
2006
3011
3561
3223
2987
3213
3458
3501
2442
1866
2679
2007
3667
4385
4026
3777
3796
4194
4005
3047
2296
3270
2008
4195
5023
4568
4339
4537
4919
4405
3425
2527
3721
2009
4076
4977
4450
4193
4371
4615
4465
3386
2443
3535

 

 

 

 

 

 

 

 

 

 

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
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
2005
1961
2382
2252
2032
1970
2353
2237
1614
1252
1438
2006
2195
2566
2500
2248
2293
2615
2505
1729
1373
1786
2007
2656
3210
3125
2853
2738
3004
2928
2175
1583
2131
2008
2967
3580
3408
3296
3187
3469
3214
2298
1757
2271
2009
2884
3490
3281
3177
3134
3203
3240
2286
1685
2281

 

 

 

 

 

 

 

 

 

Level of Sales Activity, 2009

Crop Reporting District

More

Same

Less  

Percent

Northwest

8

43

49

North Central

14

22

64

Northeast

9

31

30

West Central

6

30

65

Central

5

18

77

East Central

17

28

55

Southwest

5

30

65

South Central

4

29

67

Southeast

11

30

5

State

9

29

62

Iowa Land Purchases, 2009

 
Existing Farmers
Investors
New Farmers
Other
 
Percent
Northwest
77
19
2
1
North Central
66
29
3
Northeast
71
21
5
4
West Central
81
15
5
1
Central
72
23
4
1
East Central
71
22
4
2
Southwest
67
27
4
2
South Central
62
32
3
5
Southeast
78
16
3
4
State
72
23
4
2

Iowa Average Land Values

Iowa Average Land Values

Percentage Change in Iowa Average Land Values

Percentage Change in Iowa Average Land Values

Inflation Adjusted Iowa Average Land Values in 2009 Dollars

Inflation Adjusted Iowa Average Land Values in 2009 Dollars

Percent Change in Inflation Adjusted Iowa Average Land Values

Percent Change in Inflation Adjusted Iowa Average Land Values

Purchasers of Iowa Farmland by Year

Purchasers of Iowa Farmland by Year

Level of Sales Activity Relative to Previous Year

Level of Sales Activity Relative to Previous Year

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