Updated December, 2022
File C2-70

2022 Farmland Value Survey Iowa State University

The Iowa State University Land Value Survey was initiated in 1941 and is sponsored annually by Iowa State University. Only the state average and the district averages are based directly on Iowa State University survey data. County estimates are derived using a procedure that combines Iowa State University survey results with data from the US Census of Agriculture. Since 2014, the survey has been conducted by the Center for Agricultural and Rural Development in the Department of Economics at Iowa State University and Iowa State University Extension and Outreach.

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 a direct estimate for any particular piece of property.

The survey is an expert opinion survey based on reports by licensed real estate brokers, farm managers, appraisers, agricultural lenders, county assessors, and selected individuals considered to be knowledgeable of land market conditions. Respondents were asked to report for more than one county if they were knowledgeable about the land markets. The 2022 Iowa State University Land Value Survey is based on 668 usable county-level land value estimates provided by 443 agricultural professionals.

Of the 443 respondents, 71%completed the survey online. Online responses allow participants to provide estimates for up to 16 counties. The CARD Farmland portal facilitates the visualization and analysis of Iowa farmland values, pooling data from Iowa State University, the United States Department of Agriculture, Federal Reserve Bank of Chicago, and the REALTORS® Land Institute, as well as making use of charts over time and interactive county maps.

Participants in the survey are asked to estimate the value of high-, medium-, and low-quality land in their county. Comparative sales and other factors are taken into account by the respondents in making these value estimates. This survey is the only data source that provides an annual land value estimate at the county level for each of the 99 counties in Iowa. In addition, this survey provides estimates of high-, medium-, and low-quality land at the crop reporting district and state level.

The 2022 state average for all quality of land was estimated to be $11,411 per acre as of November 1, 2022 (Figure 1). This is an increase of $1,660 per acre from Nov. 1, 2021, and a 17% increase (Table 1).

figure 1

 

table 1

Major Factors Influencing the Farmland Market

Most survey respondents listed positive and negative factors influencing the land market. Of all respondents, 98% listed at least one positive factor, and 90% listed at least one negative factor. In most cases, respondents listed multiple factors.

There were three positive factors listed by over 10% of respondents who provided at least one positive factor. The most frequently mentioned factor was higher commodity prices, mentioned by 22.1% of respondents. Limited land supply and low interest rates through the summer of 2022 were the second- and third-most frequently mentioned positive factors, mentioned by 18.5% and 10.3% of respondents, respectively. Other frequently mentioned positive factors included cash on hand and high credit availability (9.1%), strong yields (7.2%), good farm economy (4.6%), strong land demand including from investors (4.1%), inflation (2.9%), and stock market/global economic concerns (2.6%).

There were also two negative factors listed by more than 10% of respondents who identified at least one negative factor. The most frequently mentioned negative factor affecting land values was interest rate hikes, mentioned by 34.5% of respondents. Concerns about higher input costs and stock market volatility and economic uncertainty were the second- and third-most frequently mentioned negative factors, mentioned by 14% and 8.1% of respondents, respectively. Weather uncertainty and uncertainty related to COVID-19 were each mentioned by roughly 6% of respondents.

Number of Sales Compared to Previous Year

Fifty-three percent of respondents reported more sales in 2022 relative to 2021, which ties for the 3rd highest rate since we began recording this information in 1986. On the other end of the spectrum, 16% reported fewer sales, and 31% reported the same level of sales in 2022 relative to 2021.

Land Sales by Buyer Category

The 2022 survey asked respondents what percent of the land was sold to six categories of buyers: existing local farmers, existing relocating farmers, new farmers, local investors, non-local investors, or other.

The majority of farmland sales, 68%, were to existing farmers, of which existing local farmers captured 66% of land sales. Only 2% of sales were to existing relocating farmers. New farmers represented 4% of sales.  Investors represented 27% of land sales, with 14% going to local investors and 13% to non-local. Other purchasers were 1% of sales.

Land Sales by Seller Category

The 2021 survey asked respondents what percent of land was bought from six categories of sellers: active farmers, retired farmers, estate sales, local investors, non-local investors or other.

The majority of farmland sales, 57%, were from estate sales, followed by retired farmers at 21%. Active farmers accounted for 8% of sales, while local and non-local investors each accounted for 6%.

Estate sales by crop reporting district ranged from 67% in the Northwest district to 41% in the South Central district.

Sales by investors were highest in the South Central district (25%), with local investors representing 10% of sales and non-locals 15%. The West Central district reported the lowest investor sale activity (7%), with local investors representing 4% of sales and non-locals, 3%.

Respondents by Occupation and by Mode of Survey

The 2022 survey asked the main occupation of the respondent: farm manager, appraiser, agricultural lender, broker/realtor, government, farmer/landowner, and other. This year’s survey also asked about the number of years’ experience of respondents and number of counties they offer services in.

In total, 443 agricultural professionals completed the survey, providing 668 county land value estimates. Of these 443, agricultural lenders represented the largest group, accounting for 35.7% of all respondents. Brokers/realtors and farm managers were the next largest groups, representing 14.9% and 13.5% of respondents, respectively.

Of all respondents, the percentage of agricultural lenders ranged from 17% in the Central district to more than 40% in the Northwest, Northeast, and Southeast districts.

Our respondents, on average, have 27 years of experience in their current profession and offer professional services to an average of seven counties. While government officials typically only serve one county, realtors/brokers, appraisers, farm managers, and agricultural lenders offer services to 16, 11, 9, and 4 counties, respectively.

The survey was completed online by 71% of the 443 respondents. Seventy-six percent of the respondents only provided land value estimates for their primary county and 14% and 5% of the 443 respondents provided estimates for two and three counties, respectively. Three percent of the respondents provided estimates for five or more counties.

Farmland Value and Cash Crop Price Predictions by Respondents

This year’s survey asked respondents to predict land values and cash crop prices one and five years from now, as well as the prevailing interest rates for a 20-year farmland mortgage and a one-year operating loan.

Respondents had optimistic views regarding the strength of the farmland market one and five years from now, and generally expect stable or even higher land values. Forty-eight percent of respondents forecasted an increase in their local land market in one year, while 28% expected a lower land value and 24% forecasted no change. While the most popular response was for the one-year land price forecast to be the same as the current situation, the 2nd most popular answer was an increase of 5-10%. Looking five years ahead, 24% of respondents forecasted a decline, slightly smaller than the 28% forecasting a decline 12 months from now. However, over 60% of respondents still expect a further increase in land values, with an increase of 10%–20% selected by most respondents.

This year’s survey added a question to better gauge the respondents’ views of current farmland values by asking to rate the current farmland values in their primary county as way too low, too low, just right, too high, or way too high. Fifty-nine percent and 12% of respondents think the current land values are too high or way too high, respectively, while only 5% of respondents think the current land values are too low. Twenty-four percent of respondents think the land values are just right.

Respondents expect stable corn and soybean cash crop markets. In particular, the predicted state average cash corn prices for November 2023 and 2027 (five years from now) are $6.09/bu. and $5.90/bu., respectively. The statewide average soybean price predictions are $13.12/bu. in one year and $12.84/bu. five years from now.

Respondents reported typical interest rates for 20-year farmland mortgages and one-year operating loans are 6.65% and 6.98%, respectively. These are significantly higher than one-year-ago levels due to the multiple interest rate hikes by the Federal Reserve to combat inflation.

Land Quality and Corn Suitability Rating 2

To gauge how each respondent defined high-, medium-, and low-quality land for their county, we asked for estimated average CSR2 (Corn Suitability Rating 2) for high-, medium-, and low-quality land. We also asked for estimates of the percent of land area for each land quality class.

Approximately 90% of participants provided at least one CSR2 estimate for the corresponding land quality classes. The estimated average CSR2 statewide for high-, medium-, and low-quality land is 83, 70, and 56 points respectively. The estimated percent of land area for high-, medium-, and low-quality land is 37%, 39%, and 24%, respectively.

In addition, respondents ranked high-, medium-, and low-quality land based on relative conditions in their region. For example, the average CSR2 for high-quality land in the South Central district is 72, which is only slightly larger than the CSR2 for low-quality land in the Northwest district (68).

table 2

Interpretation of the 2022 Survey Results

The 2022 Iowa State University Land Value Survey reported a 17.0% increase to $11,411 per acre in average Iowa farmland values from November 2021 to November 2022. This surge continues the trend from last year, and the $11,411 per acre nominal land values is the highest-ever since the 1940s. The 2022 nominal land value is 31% higher than the 2013 peak in nominal land values, and the inflation-adjusted value, $9,088 per acre in 2015 dollars, saw a 9% increase and is also the highest on record.

The continuing growth in value is supported by high commodity prices, limited land supply, low interest rates through the summer of 2022, readily available cash and credit, stronger-than-expected crop yields, a good farm economy, and strong demand, including from investors. At the same time, respondents are increasingly concerned about higher interest rates and input costs, stock market and economic uncertainty, along with weather and COVID concerns. In general, survey respondents are still optimistic about the strength of the future land market with nearly half of respondents forecasting a continued increase in Iowa land values.

The 2022 Iowa State University Land Value Survey revealed an overall consistent surging land value pattern across crop reporting districts, counties, and land quality classes. Land values across all nine crop reporting districts saw an increase in land values. The largest percentage increases were in the Northwest and Southwest districts, 22.3% and 22.2%, respectively. The South Central and Southeast districts, which saw the smallest percentage changes, also reported increases at or slightly above 10%. Across land quality classes, medium-quality land saw the greatest increase, 17.7%, while high- and low-quality land experienced 16.8% and 15.2% increases, respectively. All 99 counties reported the highest nominal land values since 1950; and, for 66 counties, the inflation-adjusted values are also record-high–even higher than the previous peak in 2013. The largest percentage increase, 21.6%, was reported in Mills, Fremont, Page, and Montgomery Counties. Appanoose, Decatur, Lucas, and Wayne Counties reported the lowest percentage increase, 10%.

In general, the results from the 2022 Iowa State University Land Value Survey are similar to the results from other surveys, which all continued the surging farmland market trends due to higher commodity prices and limited land supply. In November 2021, the Federal Reserve Bank of Chicago reported a 22% increase in Iowa‘s “good” farmland values from October 2021 to October 2022. In September, the REALTORS® Land Institute reported an overall 16.9% increase in Iowa cropland values from September 2021 to September 2022. The US Department of Agriculture June Area Survey reported a 21.4% rise in Iowa‘s agricultural real estate values (land and building) from June 2021 to June 2022.

Fifty-three percent of respondents reported more sales in 2022 relative to 2021, which ties the 3rd highest rate since we began recording this information in 1986. On the other end of the spectrum, just 16% reported fewer sales, and 31% reported the same level of sales in 2022 relative to 2021. Despite half of respondents reporting more sales activities, limited land supply is the second-highest factor selected.

The majority of farmland sales, 68%, were to existing farmers, of which existing local farmers capture 66% of land sales. Only 2% of sales were to existing relocating farmers. Investors represented 27% of land sales, roughly split between local and non-local investors. New farmers represented 4% of sales, and other purchasers were 1% of sales.

The farmland value estimates from the Iowa State survey are average estimates for all farmland in a county, which includes cropland as well as pasture, CRP, and timberland. Specifically, we asked respondents to estimate "farmland value for average-sized farms in your county as of November 1, 2022."

An opinion survey is just that–it represents the collective opinion of the survey respondents. Most of the respondents will use actual sales to formulate their opinions but each person can choose to weigh or discount particular sales as they deem necessary. The Iowa State Land Value Survey is an opinion survey, as are the surveys conducted by Federal Reserve Bank, USDA, and the REALTORS® Land Institute. It is important to consider the survey respondents, the questions asked, the time period covered, and other factors relating to a particular survey. As a result, it is important to note that when comparing results across surveys for Iowa and neighboring states, it is better to compare percentage change over time as opposed to dollar amount per acre.

The Iowa State Land Value Survey is intended to provide information on general land value trends and factors influencing the Iowa land market, it is not intended to provide a direct estimate for any particular piece of property. We recommend interested buyers or sellers hire an appraiser to conduct a formal appraisal of a particular parcel, go to county assessor websites, or examine recent auction results for comparable parcels in their region.

Outlook for Land Values in 2023 and Beyond

Many of the factors behind the large surge in 2021 values continue to support the 2022 increase - interest rates remained low through the first half of the year, commodity prices held at very high levels as weather and geopolitical uncertainty created crop production concerns, crop yields once again were a positive surprise despite the weather challenges throughout the growing season, cash and credit availability has remained ample and allowed farmers to stay aggressive in the land market, and stronger demand from investors nudged by inflation concerns and lack of alternative investment options.

According to USDA Economic Research Service’s December 2022 farm income forecast, www.ers.usda.gov/topics/farm-economy/farm-sector-income-finances/highlights-from-the-farm-income-forecast/, US net farm income is forecast to increase $19.5 billion (13.8%) from 2021 levels to $160.5 billion in 2022 (in inflation-adjusted terms, an 7.2% rise). US net farm income is at its highest inflation-adjusted level since 1973 and the net cash farm income in 2022 would be at its highest inflation-adjusted level since 1929(when USDA started computing inflation-adjusted values). The increase continues to be driven by the strong commodity prices and cash receipts from farming. In particular, both crop receipts and animal or animal product receipts are expected to increase by 19% and 31%, respectively. Even though the direct government payments continue to fall, the 2022 direct government payments are still forecasted at $16.5 billion, reflecting the reduction in COVID-related assistance in 2022. Farm production expenses are rising as well, but the growth in expenses has still not caught up to the growth in revenues.

The inflation concerns that arose last year continued to strengthen through the first half of this year. At their peak, we experienced the highest inflation rate since the 1980s. During the fall, the Federal Reserve conducted a series of interest rate hikes to curb inflation. Recent inflation measures have shown some weakening of inflation, but additional interest rate hikes are expected by the markets. Previous research suggests that farmland values are very sensitive to interest rate changes. It is also worth noting that changes in the federal funds rate have long-lasting impacts on farmland values, as it takes at least a decade for the full effects of an interest rate change to be capitalized in farmland values. But within the current land market environment, the interest rate increases are fighting against other factors, such as high commodity prices and farm incomes, that continue to support higher values.

The continued dramatic increase in the Iowa farmland market is a result of low interest rates, high commodity prices, strong crop yields, and the presence of significant cash reserves and credit availability, both from the agricultural markets and government programs. The result is a duo of records for both nominal and inflation-adjusted land values for all 99 counties in Iowa. Future changes in inflation, interest rates, and commodity prices will shape the trajectory of farmland market movements. Under current circumstances, many agricultural professionals still anticipate a stable and modestly rising farmland market in the near future.

More details on the survey can be found on the CARD website, and historical data can be downloaded in the AgDM Decision Tool Historical Farmland Values Data, or in AgDM File C2-72, Historical Farmland Values.

table 3

figures 2-3

2022 Iowa Farmland Value Survey -- Extension web site dedicated to the ISU Land Value Survey, including information from the 2022 news conference and the presentation by Dr. Wendong Zhang

2021 Iowa Farmland Value Survey -- Extension web site dedicated to the ISU Land Value Survey, including information from the 2021 news conference and the presentation by Dr. Wendong Zhang

2020 Iowa Farmland Value Survey -- Extension web site dedicated to the ISU Land Value Survey, including information from the 2020 news conference and the presentation by Dr. Wendong Zhang

2019 Iowa Farmland Value Survey -- Extension web site dedicated to the ISU Land Value Survey, including information from the 2019 news conference and the presentation by Dr. Wendong Zhang

2018 Iowa Farmland Value Survey -- Extension web site dedicated to the ISU Land Value Survey, including information from the 2018 news conference and the presentation by Dr. Wendong Zhang

2017 Iowa Farmland Value Survey -- Extension web site dedicated to the ISU Land Value Survey, including information from the 2017 news conference and the presentation by Dr. Wendong Zhang

2016 Iowa Farmland Value Survey -- Extension web site dedicated to the ISU Land Value Survey, including information from the 2016 news conference and the presentation by Dr. Wendong Zhang

2015 Iowa Farmland Value Survey -- Extension web site dedicated to the ISU Land Value Survey, including information from the 2015 news conference and the presentation by Dr. Wendong Zhang

2014 Iowa Farmland Value Survey -- Extension web site dedicated to the ISU Land Value Survey, including information from the 2014 news conference and the presentation by Dr. Mike Duffy.

2013 Iowa Farmland Value Survey -- Extension web site dedicated to the ISU Land Value Survey, including information from the 2013 news conference and the presentation by Dr. Mike Duffy.

2012 Iowa Farmland Value Survey -- Extension web site dedicated to the ISU Land Value Survey, including information from the 2012 news conference and the presentation by Dr. Mike Duffy.

2011 Iowa Farmland Value Survey -- Extension web site dedicated to the ISU Land Value Survey, including information from the 2011 news conference and the presentation by Dr. Mike Duffy.

2010 Iowa Land Value Survey -- Extension web site dedicated to the ISU Land Value Survey, including information from the 2010 news conference and the presentation by Dr. Mike Duffy.

 

Wendong Zhang, extension economist, 515-294-2536, wdzhang@iastate.edu

Author

Wendong Zhang

extension economist
515-294-2536
View more from this author
Use this decision tool to compare the economic and financial impacts of purchasing a parcel of farmland.
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