Extension News

Iowa Farmland Value at Record Level for Fourth Year in a Row

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12/19/2006

AMES, Iowa -- The average value of an acre of farmland in Iowa increased $290 to an all-time high of $3,204 in 2006, according to an annual survey conducted by Iowa State University. This is the fourth year in a row with a new record high, according to Mike Duffy, ISU Extension farm economist who conducts the survey.

The 2006 average value topped a previous record of $2,914 reported last year, and it represented a 10.0 percent increase statewide over the 2005 average and the first time the average value of an acre of land in Iowa topped $3,000. Duffy said values increased in all 99 counties in Iowa, with seven counties topping $4,000 an acre, and one, Scott County on the Mississippi River in eastern Iowa topping out at $5,073 per acre, the highest ever recorded in the history of the survey.

The total value of the state’s 32.6 million acres of farmland is about $105 billion. Duffy said the results of this year’s survey are notable not just for the relative strength and record values reported. He said the increases can be tied to the rapid increases in grain prices. Corn prices averaged $2.07 per bushel from January to October of this year, but current cash corn prices are well over $3.00 and it is possible to sell corn for the next couple of years for that price.

The change in demand for corn, partly attributed to its role in the bioeconomy, is having far reaching impacts on Iowa agriculture, Duffy said. Land values and rents are increasing. One difference noted in this year’s survey is that the percentage of land sales to existing farmers increased this year for the first time in several years, after losing ground to investor purchases.

Duffy said the double-digit percentage increases of the past three years raise the question of whether we are entering a time similar to the 1970s when land values increased rapidly, only to crash in the 1980s. “There are several important differences to keep in mind when pondering that question,” he said. Iowa land values increased more than 30 percent per year for 1973, 1974 and 1975, but the current increases in values are no where near that level. The boom in the values in the early 1970s followed a period of relative stability in Iowa land values.

“The increases we are seeing today are coming at a time when Iowa land values have been increasing fairly steadily over the past several years. Since 2000 Iowa land values have increased $1,347 per acre on average or a 73 percent increase. This is a substantial increase, to be sure, but it is no where near the over 125 percent increase in values from 1972 to 1975,” Duffy said. There are other differences such as the level of inflation, the fact that more land is held without debt and is held by older people.

Values increased in all 99 Iowa counties and topped $1,400 an acre in every county for the first time since ISU began conducting the survey in 1941. The highest average values in the state were reported in the Northwest Iowa crop reporting district at $3,783 per acre.  The South Central district had the lowest average values at $1,927, and that district also had the lowest percentage of increase at 7.5 percent on average. The highest percentage of increase was 14.7 percent in Southeast Iowa.

The survey of real estate brokers, farm lenders, and others who work directly with the land markets, indicated nearly half of the counties (45) in the state showed increases of more than 10 percent. There were 59 counties with average values between $3,000 and $4,000 an acre. The smallest percentage increase was 2.9 percent in Jones County, and the largest increase was 17.2 percent in Audubon County. The average value increased for the seventh year in a row after slight declines in 1998 and 1999. The largest dollar increase was $495 per acre in Louisa County.

Duffy said good grain prices were a major factor in value increases this year and were mentioned by 42 percent of those responding to the survey. Other positive factors were good crop yields, mentioned by 18 percent of the respondents; low interest rates, tax-free treatment of transactions involving land exchanges, and bio-fuel demand, each mentioned by 14 percent; and scarcity of listings, mentioned by 13 percent.

Negative factors that worked against greater increases this year included an uptrend in interest rates, mentioned by 16 percent of the respondents, high input and machinery costs, mentioned by 12 percent, and land prices that are already too high, mentioned by 11 percent.

The survey indicated low grade land, which averaged $2,195 per acre in 2006, increased 11.9 percent over the previous year. Medium grade land averaged $3,011 per acre, a 10.0 percent increase, and high grade land averaged $3,835 per acre, an increase of 9.2 percent.

Fifty-one percent of the survey respondents said the number of sales this year was about the same as last year, while 26 percent said there were more sales in 2006, and 23 percent said there were fewer sales. Existing farmers were the buyers in about 60 percent of the transactions this year, with investors accounting for about 35 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 490 usable surveys returned this year. Respondents provided 623 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 2006 survey is available on the ISU Extension Web site at www.extension.iastate.edu/landvalue/


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By Crop Reporting District:
                          2006     2005     2005-2006 Change
District             $/acre   $/acre   $       %
Northwest        3,783    3,393    391    11.5%
North Central  3,478    3,222    256     7.9%
Northeast         3,187    2,963    224     7.6%
West Central   3,410    3,048    362    11.9%
Central             3,716    3,415    301     8.8%
East Central    3,725    3,396    329     9.7%
Southwest       2,580    2,350    231     9.8%
South Central  1,927    1,793    134     7.5%
Southeast        2,849    2,483    366    14.7%
State Average  3,204    2,914    290    10.0%

By County:
                             2006     2005    2005–2006
County Name    $/acre   $/acre  $ Change  % Change
Adair                2,198    2,020    179     8.8%
Adams            2,203    1,952    251    12.9%
Allamakee      2,126    1,978    148     7.5%
Appanoose    1,564    1,455    109     7.5%
Audubon        3,311    2,824    487    17.2%
Benton             3,619    3,314    305     9.2%
Black Hawk    3,952    3,636    316     8.7%
Boone             3,917    3,597    320     8.9%
Bremer           3,621    3,345    276     8.3%
Buchanan       3,562    3,289    273     8.3%
Buena Vista   3,914    3,555    359    10.1%
Butler              3,458    3,191    267     8.4%
Calhoun         3,958    3,626    332     9.2%
Carroll            3,581    3,307    274     8.3%
Cass               2,950    2,610    339    13.0%
Cedar              4,012    3,667    346     9.4%
Cerro Gordo   3,567    3,302    265     8.0%
Cherokee       3,581    3,186    395    12.4%
Chickasaw      2,909    2,746    163     5.9%
Clarke              1,811    1,607    205    12.7%
Clay                  3,612    3,281    331    10.1%
Clayton            2,919    2,716    203     7.5%
Clinton             3,285    3,157    128     4.1%
Crawford         3,254    2,880    375    13.0%
Dallas             3,385    3,167    219     6.9%
Davis               1,956    1,676    280    16.7%
Decatur           1,465    1,321    144    10.9%
Delaware       3,866    3,494    372    10.6%
Des Moines    3,179    2,947    232     7.9%
Dickinson       3,404    3,049    355    11.6%
Dubuque        3,513    3,267    245     7.5%
Emmet            3,721    3,380    341    10.1%
Fayette            3,337    3,032    305    10.1%
Floyd               3,320    3,058    263     8.6%
Franklin           3,518    3,273    245     7.5%
Fremont         2,832    2,588    244     9.4%
Greene           3,470    3,154    316    10.0%
Grundy            3,996    3,759    237     6.3%
Guthrie            2,963    2,643    320    12.1%
Hamilton        4,097    3,785    312     8.2%
Hancock         3,592    3,344    248     7.4%
Hardin            3,667    3,387    279     8.2%
Harrison         3,093    2,756    337    12.2%
Henry              3,073    2,812    261     9.3%
Howard          2,621    2,422    199     8.2%
Humboldt       3,873    3,600    273     7.6%
Ida                   3,668    3,243    425    13.1%
Iowa                3,131    2,708    423    15.6%
Jackson          2,931    2,724    207     7.6%
Jasper             3,301    2,924    376    12.9%
Jefferson         2,375    2,099    276    13.1%
Johnson          3,911    3,473    438    12.6%
Jones              3,147    3,059     88     2.9%
Keokuk            2,836    2,460    376    15.3%
Kossuth          3,707    3,456    251     7.3%
Lee                  2,893    2,620    273    10.4%
Linn                 3,983    3,661    322     8.8%
Louisa             3,413    2,918    495    17.0%
Lucas              1,672    1,555    117     7.5%
Lyon                 3,447    3,088    360    11.6%
Madison          2,644    2,427    218     9.0%
Mahaska         2,963    2,619    344    13.1%
Marion              2,925    2,563    363    14.2%
Marshall           3,433    3,303    130     3.9%
Mills                  3,095    2,714    381    14.0%
Mitchell             3,252    2,995    257     8.6%
Monona            2,838    2,492    346    13.9%
Monroe              1,981    1,718    263    15.3%
Montgomery     2,630    2,404    227     9.4%
Muscatine         3,647    3,311    336    10.1%
O'Brien              4,255    3,811    444    11.6%
Osceola            3,640    3,261    380    11.6%
Page                  2,372    2,206    166     7.5%
Palo Alto            3,525    3,248    277     8.5%
Plymouth           3,830    3,386    444    13.1%
Pocahontas      3,830    3,547    283     8.0%
Polk                    3,487    3,180    307     9.6%
Pottawattamie  3,294    2,973    321    10.8%
Poweshiek        3,124    2,767    358    12.9%
Ringgold            1,726    1,494    232    15.5%
Sac                      3,824    3,425    399    11.6%
Scott                     5,073    4,707    366     7.8%
Shelby                  3,287    2,925    363    12.4%
Sioux                    4,063    3,617    446    12.3%
Story                     4,021    3,679    342     9.3%
Tama                   3,320    3,015    305    10.1%
Taylor                   1,948    1,791    157     8.8%
Union                   2,085    1,927    158     8.2%
Van Buren            2,159    1,850    309    16.7%
Wapello                2,237    2,056    180     8.8%
Warren                 2,935    2,716    219     8.1%
Washington        3,624    3,144    480    15.3%
Wayne                  1,596    1,485    111     7.5%
Webster               4,040    3,732    308     8.3%
Winnebago         3,238    3,013    224     7.4%
Winneshiek        2,720    2,522    198     7.8%
Woodbury           3,014    2,650    364    13.7%
Worth                   3,268    3,025    243     8.0%
Wright                 3,988    3,707    281     7.6%

Contacts :

Michael Duffy, Economics, (515) 294-3000, mduffy@iastate.edu

Del Marks, Continuing Education and Communication Services, (515) 294-9807, delmarks@iastate.edu