Iowa Land Price Survey Shows 6.6% Rise in Six Months

A recent survey of farmland real estate brokers shows that the price of Iowa’s best farmland rose by an average of 6.6 percent from March 2008 through August 2008, cooling slightly versus the previous six month period. This survey was conducted by the Iowa Farm and Land Chapter 2 Realtors Land Institute, as it has been done every March and September since 1978. The RLI is composed of real estate brokers who specialize in farm and land sales, farm management, and appraisals. The results were cited in an article in the Sunday Des Moines Register on September 17, 2008.

Troy Louwagie, the survey chairman as well as a real estate coordinator at Hertz Farm Management in Mount Vernon, had this to say about the results of the survey: “You’re seeing less demand for land for housing and commercial developments in the cities and a return to the more normal profile of 80 percent of buyers being existing farmers.” This compares to the same period last year during which approximately 60 percent of buyers being existing farmers.

For those who follow commodity markets, it is obvious that commodity prices have been a big contributing factor to the rising land values. While a plunge in commodity prices could precipitate a corresponding plunge in land values, Randy Hertz of Hertz Farm Management says, “Fortunately, farms today are in a much stronger balance-sheet position than they were 25 years ago” when land values declined by 70 percent. And at this point, there is nothing to indicate that a plunge in commodity prices is imminent or even anywhere on the horizon.

For the survey, the state is divided into nine districts. Only one of those districts had per-acre averages for high-qualify cropland of less than $5,000 in this survey, compared to four districts with an average lower than $5,000 in the survey over the same period a year ago. The averages in two of the districts exceeded $6,000 per acre.

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Ken Tharp

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Copyright © 2008 By Ken Tharp, All Rights Reserved. * Iowa Land Price Survey Shows 6.6% Rise in Six Months * Contact Ken Tharp for information on Section 1031 tax-deferred exchanges anywhere in the United States.