In a further confirmation that values have peaked at least for now, the REALTORS® Land Institute semi-annual survey shows a 7.6% drop in the price for farmland over the six months ending February 28 of this year. This survey is conducted every six months and consists of input from the state's farmland real estate community. The previous survey indicated an increase of 6.6%. The previous twelve months, therefore, show approximately a 1% drop in values.
No one is necessarily panicking about this drop or leveling off, however. According to Troy Louwagie, REALTOR® with Hertz Farm Management and also the spokesman for the Iowa Farm Land Chapter No. 2 REALTORS® Land Institute, the people behind the survey, "Land went up about 70 percent in the past five years. We probably were due for a correction." He also points out that prices are still at roughly the level they were a year ago, meaning that values remain strong.
Sam Kain of Farmers National Company projects the future values of land to remain relatively stable. He's not expecting a precipitous drop, but wouldn't be surprised by small decreases. Mr. Kain points out two factors that could help support land values: 1) investors with cash may look at land as one of the safest places to put that cash in the midst of the general market uncertainties we are facing, and 2) current farmers and land owners may believe that their equity is best used by staying put and not selling in the immediate future, meaning that available land may be somewhat more scarce than in previous years.
Here is a graphic of the breakdown statewide, courtesy of The Des Moines Register:
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