AMES, Iowa -- The average value of an acre of farmland in Iowa increased $285 to an all-time high of $2,914 in 2005, according to an annual survey conducted by Iowa State University. This is the third year in a row with a new record high, according to Mike Duffy, ISU Extension farm economist who conducts the survey.
The 2005 average value topped a previous record of $2,629 reported last year, and it represented a 10.8 percent increase statewide over the 2004 average. Duffy said values increased in all 99 counties in Iowa, and only 21 counties reported an average increase of less than 10 percent.
Using the average value of $2,914, the total value of the state’s 32.6 million acres of farmland is about $95 billion. Duffy said that the effect of inflation on the value of the dollar means that the 2005 figure is roughly the same as the value of land in 1973, before the run-up in values began that led to a peak of $2,147 in 1981. In inflation-adjusted dollars, the peak arrived in 1979.
After the peak, Iowa land values dropped sharply, reaching a statewide average of $787 per acre in 1986 before beginning to recover. The 2005 figure represents an increase of 270 percent in the past 19 years and 57 percent in the past five years.
Values increased in all 99 Iowa counties and topped $1,000 an acre in every county for the second time since ISU began conducting the survey in 1941. The highest average values in the state were reported in the Central Iowa crop reporting district at $3,415 per acre. The South Central district had the lowest average values at $1,793, but that district also had the highest percentage of increase at 15.9 percent on average.
The survey of real estate brokers, farm lenders, and others who work directly with the land markets, indicated the increases topped 8 percent in all nine of the state’s crop reporting districts, ranging from 8.6 percent in the Southeast district to 15.9 percent in the South Central crop reporting district. Gains of less than 10 percent were reported in only 21 counties. Seven counties had increases of more than 15 percent. The smallest percentage increase was 3.6 percent in Marshall County, and the largest increase was 24.3 percent in Ringgold County.
The average value increased for the sixth year in a row after slight declines in 1998 and 1999. The largest dollar increase was $540 per acre in Scott County, which also set a state record with an average value of $4,707 per acre. Other counties with an increase of more than $400 per acre included Delaware, Marion, Mills and Audubon.
Duffy said low interest rates were a major factor in value increases this year and were mentioned by 27 percent of those responding to the survey. Other positive factors were good crop yields, mentioned by 26 percent of the respondents; tax-free treatment of transactions involving land exchanges, mentioned by 20 percent; government programs and payments, mentioned by 16 percent; and strong investment demand, mentioned by 12 percent.
Negative factors that worked against greater increases this year included lower current grain prices, listed by 28 percent of the respondents; the high costs of farm inputs and machinery and low profitability in general, mentioned by 16 percent; and an uptrend in interest rates, also mentioned by 16 percent.
Duffy said he is frequently asked whether land values have peaked or whether the market is too high. He said the answers to those questions cannot be determined from the survey, but “it does appear that these concerns are on people’s minds. When you combine several of the similar negative factors mentioned, well over a fourth of the respondents are concerned that the market is too high for profitable farm production,” he said.
Duffy also noted that farmland rental rates have been increasing more slowly than land values over the past several years. Factors that might contribute to stability in land prices include the observation that about 45 percent of the farmland in Iowa is owned by people who do not live on farms, and about 19 percent of those non-farm owners do not even live in Iowa. Duffy said those factors, combined with a survey that showed about three-fourths of Iowa’s farmland is owned without debt, indicate the potential for significant land value declines is less than it was in the early 1980s.
The survey indicated low grade land, which averaged $1,961 per acre in 2005, increased 14.5 percent over the previous year. Medium grade land averaged $2,736 per acre, a 11.4 percent increase, and high grade land averaged $3,511 per acre, an increase of 10.0 percent.
Forty-eight percent of the survey respondents said the number of sales this year was about the same as last year, while 29 percent said there were more sales in 2005, and 23 percent said there were fewer sales. Existing farmers were the buyers in about 56 percent of the transactions this year, with investors accounting for about 39 percent of the sales, new farmers 3 percent, and other purchasers 2 percent.
About 1,100 copies of the survey are mailed each year to licensed real estate brokers, ag lenders and others knowledgeable of Iowa land values. Respondents are asked to report values as of Nov. 1. Average response is 500 to 600 completed surveys, with 483 returned this year. Respondents provided 615 individual county estimates, including land values in nearby counties if they had knowledge of values in those counties.
Only the state average and the averages for the nine crop reporting districts are based directly on data collected in the survey. The county estimates are derived through a procedure that combines ISU survey results with data from the U.S. Census of Agriculture. The ISU survey is the only one of several conducted throughout the year that reports data for all 99 counties.
The survey is sponsored by the Iowa Agriculture and Home Economics Experiment Station at ISU, with results reported by ISU Extension. Duffy was assisted in the project this year by Darnell Smith, extension program specialist in economics.
Additional information on the 2005 survey is available on the ISU Extension Web site at www.extension.iastate.edu/emms/land05/
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Average Land Values By Crop Reporting District:
2005 2004 2004-2005 Change
District $/acre $/acre $ %
Northwest 3,393 3,118 274 8.8%
North Central 3,222 2,913 309 10.6%
Northeast 2,963 2,665 298 11.2%
West Central 3,048 2,728 320 11.7%
Central 3,415 3,101 314 10.1%
East Central 3,396 3,054 342 11.2%
Southwest 2,350 2,088 262 12.5%
South Central 1,793 1,547 246 15.9%
Southeast 2,483 2,286 198 8.6%
State Average 2,914 2,629 285 10.8%
By County:
2005 2004 2004–2005
County $/acre $/acre $ Change % Change
Adair 2,020 1,766 254 14.4%
Adams 1,952 1,697 255 15.0%
Allamakee 1,978 1,789 189 10.5%
Appanoose 1,455 1,270 185 14.5%
Audubon 2,824 2,421 403 16.6%
Benton 3,314 3,015 299 9.9%
Black Hawk 3,636 3,311 325 9.8%
Boone 3,597 3,284 313 9.5%
Bremer 3,345 3,027 317 10.5%
Buchanan 3,289 2,976 313 10.5%
Buena Vista 3,555 3,223 332 10.3%
Butler 3,191 2,900 290 10.0%
Calhoun 3,626 3,302 324 9.8%
Carroll 3,307 3,054 252 8.3%
Cass 2,610 2,279 331 14.5%
Cedar 3,667 3,280 386 11.8%
Cerro Gordo 3,302 2,995 307 10.2%
Cherokee 3,186 2,890 297 10.3%
Chickasaw 2,746 2,523 223 8.8%
Clarke 1,607 1,327 280 21.1%
Clay 3,281 2,974 307 10.3%
Clayton 2,716 2,430 286 11.8%
Clinton 3,157 2,939 218 7.4%
Crawford 2,880 2,607 273 10.5%
Dallas 3,167 2,947 220 7.5%
Davis 1,676 1,461 214 14.7%
Decatur 1,321 1,104 217 19.7%
Delaware 3,494 3,059 434 14.2%
Des Moines 2,947 2,840 107 3.8%
Dickinson 3,049 2,771 278 10.0%
Dubuque 3,267 2,949 318 10.8%
Emmet 3,380 3,064 316 10.3%
Fayette 3,032 2,671 360 13.5%
Floyd 3,058 2,781 276 9.9%
Franklin 3,273 2,962 312 10.5%
Fremont 2,588 2,342 246 10.5%
Greene 3,154 2,909 245 8.4%
Grundy 3,759 3,493 267 7.6%
Guthrie 2,643 2,388 255 10.7%
Hamilton 3,785 3,442 343 10.0%
Hancock 3,344 2,986 358 12.0%
Hardin 3,387 3,080 307 10.0%
Harrison 2,756 2,460 296 12.0%
Henry 2,812 2,677 134 5.0%
Howard 2,422 2,190 232 10.6%
Humboldt 3,600 3,260 339 10.4%
Ida 3,243 2,935 308 10.5%
Iowa 2,708 2,370 338 14.3%
Jackson 2,724 2,427 297 12.2%
Jasper 2,924 2,687 238 8.8%
Jefferson 2,099 1,916 184 9.6%
Johnson 3,473 3,169 304 9.6%
Jones 3,059 2,883 176 6.1%
Keokuk 2,460 2,281 179 7.8%
Kossuth 3,456 3,119 337 10.8%
Lee 2,620 2,341 279 11.9%
Linn 3,661 3,275 386 11.8%
Louisa 2,918 2,579 339 13.1%
Lucas 1,555 1,358 197 14.5%
Lyon 3,088 2,938 149 5.1%
Madison 2,427 2,136 290 13.6%
Mahaska 2,619 2,362 257 10.9%
Marion 2,563 2,136 427 20.0%
Marshall 3,303 3,187 116 3.6%
Mills 2,714 2,310 404 17.5%
Mitchell 2,995 2,724 270 9.9%
Monona 2,492 2,251 241 10.7%
Monroe 1,718 1,418 300 21.1%
Montgomery 2,404 2,103 301 14.3%
Muscatine 3,311 2,976 336 11.3%
O’Brien 3,811 3,463 348 10.0%
Osceola 3,261 2,963 298 10.0%
Page 2,206 1,994 212 10.6%
Palo Alto 3,248 2,937 311 10.6%
Plymouth 3,386 3,064 321 10.5%
Pocahontas 3,547 3,210 337 10.5%
Polk 3,180 2,893 288 9.9%
Pottawattamie 2,973 2,627 347 13.2%
Poweshiek 2,767 2,518 248 9.9%
Ringgold 1,494 1,202 292 24.3%
Sac 3,425 3,112 314 10.1%
Scott 4,707 4,167 540 12.9%
Shelby 2,925 2,614 311 11.9%
Sioux 3,617 3,434 182 5.3%
Story 3,679 3,362 317 9.4%
Tama 3,015 2,760 255 9.2%
Taylor 1,791 1,629 163 10.0%
Union 1,927 1,684 243 14.5%
Van Buren 1,850 1,614 236 14.6%
Wapello 2,056 1,969 87 4.4%
Warren 2,716 2,395 321 13.4%
Washington 3,144 2,915 228 7.8%
Wayne 1,485 1,312 172 13.1%
Webster 3,732 3,394 338 10.0%
Winnebago 3,013 2,725 288 10.6%
Winneshiek 2,522 2,269 254 11.2%
Woodbury 2,650 2,395 255 10.7%
Worth 3,025 2,708 317 11.7%
Wright 3,707 3,358 350 10.4%