Updated December, 2021
File C2-70

2021 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 2021 Iowa State University Land Value Survey is based on 645 usable county-level land value estimates provided by 455 agricultural professionals.

Of the 455 respondents, 75% 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 2021 state average for all quality of land was estimated to be $9,751 per acre as of November 1, 2021 (Figure 1). This is an increase of $2,192 per acre from Nov. 1, 2020, and a 29% 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, 94% listed at least one positive factor, and 65% listed at least one negative factor. In most cases, respondents listed multiple factors.

There were two 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 28.5% of respondents. Favorable interest rates and strong yields were the second- and third-most frequently mentioned positive factors, mentioned by 24.4% and 7.4% of respondents, respectively. Other frequently mentioned positive factors included limited land supply (7%), strong demand, including from investors (6.8%), COVID-related government payments (6.3%), and good farm economy (4%).

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 higher input costs, mentioned by 20% of respondents. Concerns about the sustainability of high land prices and possible changes in interest rates were the second- and third-most frequently mentioned negative factors, mentioned by 12% and 8.5% of respondents, respectively. Political uncertainty related to policies, such as tax law changes, and uncertainty related to COVID-19 were each mentioned by 5-9% of respondents.

Number of Sales Compared to Previous Year

Seventy-four percent of respondents reported more sales in 2021 relative to 2020, which is the highest since we began recording this information in 1986. On the other end of the spectrum, just 9% reported fewer sales, and 17% reported the same level of sales in 2021 relative to 2020.

Land Sales by Buyer Category

The 2021 survey asked respondents what percent of the land was sold to five categories of buyers: existing local farmers, existing relocating farmers, new farmers, 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. Investors represented 25% of land sales. New farmers represented 4% of sales, and other purchasers were 2% of sales.

Land Sales by Seller Category

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

The majority of farmland sales, 54%, were from estate sales, followed by retired farmers at 24%. Active farmers accounted for 9% of sales, while investors accounted for 10%.

Estate sales by crop reporting district ranged from 66% in the Northwest district to 43% in the Southwest district.

Sales by investors were highest in the South Central district (18%). The West Central district reported the lowest investor sale activity (5%).

Respondents by Occupation and by Mode of Survey

The 2021 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, 455 agricultural professionals completed the survey, providing 645 county land value estimates. Of these 455, agricultural lenders represented the largest group, accounting for 39% of all respondents. Brokers/realtors, farm managers, and county assessors or USDA FSA lenders were the next three largest groups, representing 14%, 13%, and 11% of respondents, respectively.

Of all respondents, the percentage of agricultural lenders ranged from 26% in the Central district to more than 40% in the Northwest, West Central, and Northeast districts.

Our respondents, on average, have 22 years of experience in their current profession and offer professional services to an average of six counties. While government officials typically only serve two counties at most, realtors/brokers, appraisers, farm managers, and agricultural lenders offer services to 11, 9, 8, and 5 counties, respectively.

The survey was completed online by 75% of the 455 respondents. Seventy-one percent of the respondents only provided land value estimates for their primary county and 14% and 7% of the 455 respondents provided estimates for two and three counties, respectively. Five 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. A vast majority, 80%, of respondents forecasted an increase in their local land market in one year, while 6% expected a lower land value and 14% forecasted no change. Most people expected the land market will continue to grow less than 10% one year from now. Looking five years ahead, 11% of respondents forecasted a decline, slightly larger than the 6% forecasting a decline 12 months from now. However, over 80% of respondents still expect a further increase in land values, with an increase of 10%-20% selected by most respondents.

Respondents expect stable corn and soybean cash crop markets. In particular, the predicted state average cash corn prices for November 2022 and 2026 (five years from now) are $5.09/bu. and $5.11/bu., respectively. The statewide average soybean price predictions are $11.55/bu. in one year and $11.72/bu. five years from now.

Respondents reported typical interest rates for 20-year farmland mortgages and one-year operating loans are 3.89% and 4.31%, respectively. These are far lower than one-year-ago levels due to drastic interest rate cuts by the Federal Reserve to combat the COVID-19 pandemic in March 2020.

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 80% 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 55 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 (67).

table 2

Interpretation of the 2021 Survey Results

The 2021 Iowa State University Land Value Survey reported a 29.0% increase to $9,751 per acre in average Iowa farmland values from November 2020 to November 2021. This dramatic surge is the largest in magnitude since 2011, and the $9,751/acre nominal land values is the highest-ever since the 1940s. The 2021 nominal land value is 12% higher than the 2013 peak in nominal land values, although the inflation-adjusted value, $8,367/acre in 2015 dollars, saw a 21% increase and is still lower than the 2012 and 2013 inflation-adjusted values.

The recent surge is buoyed by substantially higher commodity prices, low interest rates, stronger-than-expected crop yields, strong demand, including from investors, and limited land supply. At the same time, respondents are increasingly concerned about higher input costs, the sustainability of high land prices, possible changes in interest rates, and political uncertainty regarding policies, such as possible tax law changes, which were all cited as negative factors influencing the land market. In general, survey respondents are very optimistic about the strength of the future land market with 80% of respondents forecasting a continued increase in Iowa land values.

The 2021 Iowa State 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 North Central and West Central districts, 34.5% and 33.1%, respectively. The Southwest and Southeast districts, which saw the smallest percentage changes, also reported an increase of more than 20%. Across land quality classes, high-quality land saw the greatest increase, 30.5%, while medium- and low-quality land experienced 27.4% and 26.0% increases, respectively. All 99 counties reported the highest nominal land values since 1950; and, for 20 counties, the inflation-adjusted values are also record-high - even higher than the previous peak in 2013. The largest percentage increase, 36.4%, was reported in both Clayton and Allamakee Counties, while Keokuk County reported lowest percentage increase, 23.2%.

In general, the results from the 2021 Iowa State University Land Value Survey echo results from other surveys, which all showed surging farmland market trends due to higher commodity prices and low interest rates. In November 2021, the Federal Reserve Bank of Chicago reported a 28% increase in Iowa‘s "good" farmland values from October 2020 to October 2021. In September, the REALTORS® Land Institute reported an overall 26.6% increase in Iowa cropland values from September 2020 to September 2021. The US Department of Agriculture June Area Survey reported a 9.6% rise in Iowa‘s agricultural real estate values (land and building) from June 2020 to June 2021, which is smaller in magnitude because it did not capture the continued surge from June 2021 to November 2021.

Seventy-four percent of respondents reported more sales in 2021 relative to 2020, which is the highest since we began recording this information in 1986. On the other end of the spectrum, just 9% reported fewer sales, and 17% reported the same level of sales in 2021 relative to 2020.

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 25% of land sales. New farmers represented 4% of sales, and other purchasers were 2% 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, 2021."

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.

There are several new uncertainties worth watching over the next year or two. First, we are now witnessing the highest inflation rate since the 1980s, and the inflation-adjusted farmland loan rates are practically negative. Second, based on the 2021 survey, the most frequently mentioned negative factor affecting land values was higher input costs. Producers already saw this in many factors of their production, including fertilizers, machinery, and fuel. Third, respondents are also concerned about the sustainability of current high land prices and worry about a possible bubble burst. The last time Iowa farmland values grew near 30% was in the mid-1970s and 2011, which undoubtedly leads to worries about the 1980s farm crisis and the downturn after the 2013 peak. Our previous research shows that unlike the 1970s-1980s, the current farm income growth is not significantly driven by inflation, the interest rate environment is still historically low, and agricultural lenders are following more prudent lending practices. It is possible that buyers in the current land market ignored the temporary nature of strong government payments and thus overbid, and thus there could be some downward adjustment in the future. In the 2021 survey, a larger share of respondents also forecasted a possible decline five years from now than 12 months later. However, at least the current evidence suggests that the contemporary farmland values are still supported by the real, strong income growth and low interest rates. With at least 80% of Iowa farmland fully paid for, https://store.extension.iastate.edu/Product/6492.pdf, we do not foresee a sudden collapse of the agricultural land markets in the near future.

The dramatic increase in the Iowa farmland market is a result of lower interest rates, higher commodity prices, strong crop yields, and significant government payments. The result is a record-high nominal land values for all 99 counties in Iowa, and the third-highest values in inflation-adjusted terms-only less than 2012 and 2013 values. 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

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
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Use this decision tool to compare the economic and financial impacts of purchasing a parcel of farmland.
This spreadsheet provides historical Iowa land values for county, district, and state beginning in 1950.