Farmland value reaches historic $8,296 statewide average

Press release from the Iowa State Extension Office- Wednesday, Dec. 12, 2012

Farmland value reaches historic $8,296 statewide average

Average Iowa farmland value is estimated to be $8,296 per acre, an increase of 23.7 percent from 2011, according to results of the Iowa Land Value Survey conducted in November. This is the third year in a row where values have increased more than 15 percent. The 2012 values are historical peaks.

The Northwest Crop Reporting District, which includes O’Brien, Osceola, Dickinson and Lyon counties, reported the highest land values at $12,890, an increase of $3,241 (33.6 percent) from 2011.

“The 2012 land value survey covers one of the most remarkable years in Iowa land value history,” Mike Duffy, Iowa State University economics professor and extension farm management economist who conducts the survey, stated in a press release. “This is the highest state value recorded by the survey, and the first time county averages have reached levels over $10,000. While this is an interesting time, there is considerable uncertainty surrounding future land values.”

Mr. Duffy said increases in farm income and low interest rates are factors in the high values of farmland.

Farmland values are highly correlated with farm income. As farm income increases, so will land values. In 2005, corn prices averaged $1.94 per bushel in Iowa. The preliminary estimated price for November 2012 is $6.80. Soybean prices changed from $5.54 to $13.70 over the same period. Coming into 2012, there was a general sentiment that prices would decline from their peaks. But, the drought changed this and the prices remained at high levels.

The increase shown in the Iowa Land Value Survey is somewhat higher than results of other recent surveys of Iowa farmland value: the Chicago Federal Reserve Bank estimated an 18 percent increase in Iowa land values from October 2011 to October 2012 and the Iowa Chapter of the Realtors Land Institute estimated a 7.7 percent increase from March to September 2012. The differences were attributed to different study periods, different population samples, and different wording of the survey.

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