Farmland values continue steep climb

Farmland values in Iowa have increased 24 percent in the past year, according to the March 2012 land trends and values survey conducted by the Iowa Farm and Land Chapter #2 Realtors Land Institute. The 24 percent increase comes on the heels of a 25 percent increase from March 2010 to March 11.

The participants in the survey are specialists in farmland and are knowledgeable about land sales and land appraisals. They were asked to estimate the value of farmland as of March 1 for bare, unimproved land with a sale price on a cash basis.

The survey showed a statewide average increase of cropland values of 10.8 percent from September 2011 to March 2012, slightly lower than the 12.9 percent increase reported in the previous six months.

The southeast reporting district, which includes Washington County, grew by 9.1 percent in value in the past half year. That was actually among the smallest gains in the state. Only the northeast district reported a lower increase at 9 percent.

The southeast district has been the seventh highest district of the nine districts in the past few years, usually edging out the south central and southwest districts. However, the southwest district reported an increase in values of 12.9 percent since September, the largest increase of any district. The southwest district has now eclipsed the southeast district in the estimated value of its medium-quality and low-quality cropland and its non-tillable pasture land.

The southeast district still holds the edge over the southwest district in high-quality cropland. The estimated value of high-quality cropland in southeast Iowa is about $8,900 per acre, up from $8,100 in September. The state average is $8,400. The values for medium- and low-quality cropland in the district are $6,300 and $3,900, respectively, up from $5,700 and $3,600 six months ago. The state average for medium-quality cropland is $7,100 while the average for low-quality cropland is $4,900.

The value of non-tillable land in southeast Iowa is $2,100, compared to $1,900 in September but still under the state average of $2,400. The value of timber in southeast Iowa is $1,800 while the state average is $2,100.

Two districts reported land values over $10,000 an acre for the first time ever. Northwest Iowa led the way with high-quality land values of $10,700. West Central Iowa was next in line with estimated values of $10,200.

Broker Kyle J. Hansen, who issued the press release on the survey, stated in the press release that some of the factors contributing to the increase in farmland values were strong commodity prices and favorable long-term interest rates. He also attributed the limited amount of land offered for sale as another factor that pushed the price up. The lack of stable alternative investments, higher livestock prices and a fear of inflation were other reasons Hansen listed as contributing to the increase.

Hansen said that higher input costs in the future could affect farmland values. Changes in interest rates, the amount of land for sale and the price of commodities could all influence cropland value. He said that continued uncertainty of the U.S. and world economy could also have an impact on farmland values.