Iowa Farmland Sees Its Greatest Increase in Value Since 1976

By
Services for Real Estate Pros with Iowa Equity Exchange

According to the Des Moines Register, Iowa farmland prices set a record this year for the fifth year in a row. TheFarm average price of farmland in Iowa is now $3,908 per acre. This is based upon an annual survey conducted and released by the Iowa State University Extension.

Here’s the big news - $3,908 per acre is a 22% increase over last year’s average, which is the largest one-year increase since 1976. Pretty sweet ROI, huh?

Why would this be, in this era of slow real estate markets? Two reasons, according to the survey respondents:

  1. Higher corn and soybean prices due to demand for ethanol and for export, and,
  2. Low interest rates.

Factoid from the article: about 2 out of 3 acres of Iowa cropland are owned by Iowa residents.

So, will this sort of increase in value continue? According to Michael Duffy, the ISU economist who conducts the study, “We’ll see a strong land market in Iowa for at least five years… I don’t think this demand will diminish in the near future. I don’t see anything that can cause a downturn.” On the other side of the coin, Tom Huston, who was superintendent of banking in Iowa during the farm crisis of the early 1980s, says that land prices are reaching a point where they might not be justified by the revenue the land can generate, which was one of the reasons for the problems in the 1980s, when average per acre values fell from $2,147 in 1981 to $787 in 1986. Right now, it seems like ethanol is the key—if demand continues to be strong, land values may be held up by that strength.

Another factoid: only 25% of Iowa farmland carries any debt. Wow!

When values are adjusted for inflation, it’s interesting to note that we are not all that near the high point of yesteryear. In 1979, prior to the farm crisis, Iowa farmland values averaged $5,564 per acre (again, adjusted for inflation).

Final factoid: Sixty percent of farmland purchasers in 2007 were farmers, which is about the same percentage as last year. Also remaining about the same were the percentages of investors buying (35%), and “others/beginning farmers” (5%).

The survey falls in line with two other surveys that were released recently: the Chicago Reserve Bank’s survey showing an October to September increase of 21%, and an Iowa farm real estate brokers’ survey of its membership, which showed an increase of 20.7% over roughly the same period as the Chicago survey.

Anybody want to buy some Iowa farmland? If so, see Jason Smith!

Price graph

 

Ken Tharp

Iowa Equity Exchange logo

Providing Qualified Intermediary services for Section 1031 tax deferred exchanges all over the United States. Headquartered in Iowa, our services are available in Missouri, Kansas, Nebraska, Colorado, North Dakota, South Dakota, Minnesota, Wisconsin, Illinois, and all other states.

INTEGRITY.  PRECISION.  SECURITY.

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Location:
Iowa
Groups:
All Land
Farms, Ranches, Acreages and Land
Tags:
iowa exchanges
iowa section 1031
iowa farmland exchanges
iowa tax deferred exchanges

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Rainer
86,590
Ron Parise
LocateHomes.com - Cape Coral, FL
So my uncle Jake is a millionare...pretty cool.
Dec 19, 2007 10:32 AM #1
Rainer
70,637
Ken Tharp
Iowa Equity Exchange - West Des Moines, IA
Section 1031 Exchanges, Iowa/U.S.
Ron - He may well be! 
Dec 19, 2007 10:42 AM #2
Rainer
52,213
Jason Smith
DreamDirt Auction - Mondamin, IA

Ron if he owns at least 255 acreage of "average" and he likely is.  According to the Office of Social and Economic Trend Analysis the average farm size in Harrison County where I live is 500 acres.  Certainly land values are going to depend on many things but generally fall in line with the CSR of the soil.  I've seen land sell as high as $6375 per acre this year, and have heard of $7700 per acre for farmland east of here.  He may very well be a multi-millionaire!  Below I listed some of the recent land sales from our area with the acres, CSR and sold price per acre.

Great post Ken and thanks for the plug! 

200 Acres 80 tillable CSR 55  $2200
420 Acres 320 tillable CRS 50 $2175
100 Acres 98 tillable CSR 82 $6375
80 Acres 78 tillable CSR 83 $6260
60 Acres 60 tillable CSR 85 $5800
50 Acres 35 tillable CSR 79 $4900
200 Acres 114 tillable CSR 40 $2925
40 Acres 20 tillable CSR 35 $4000
50 Acres 14 tillable CSR 83 $3150
150 Acres 100 tillable CSR 52 $2320
143 Acres 87 tillable CSR 45 $2125
57 Acres 36 tillable CSR 60 $3500
80 Acres 78 tillable CSR 81 $5000
40 Acres 38 tillable CSR 54 $3300
160 Acres 152 tillable CSR 50 $4010

Dec 19, 2007 01:37 PM #3
Rainer
70,637
Ken Tharp
Iowa Equity Exchange - West Des Moines, IA
Section 1031 Exchanges, Iowa/U.S.

Jason - In the Register article, Tom Huston says that "a recent sale of several parcels of Washington County farmland brought as much as $7,950 an acre. That's the highest I've seen in my 50 years in banking," Huston said. "It's just wild."

Ken Tharp, Iowa Equity Exchange 

Dec 19, 2007 02:13 PM #4
Rainmaker
702,304
Bill Roberts
Brooks and Dunphy Real Estate - Oceanside, CA
"Baby Boomer" Retirement Planner

Ken, You and Jason are supplying some very good information here. Thank you.

Bill Roberts

Dec 20, 2007 03:21 AM #5
Rainer
70,637
Ken Tharp
Iowa Equity Exchange - West Des Moines, IA
Section 1031 Exchanges, Iowa/U.S.

Bill - Thanks for the kind words. Jason is a tremendous source for info about land, farms, and investing in them. He knows this stuff, and he lives it. I'm just kind of scratching at the edges. 

Ken Tharp, Iowa Equity Exchange 

Dec 20, 2007 04:20 AM #6
Rainmaker
667,686
Laura Filip
Laura Filip Broker , Opening doors for All Seasons of Life - Whitesboro, TX
What can we do for you today?

Ken Tharp thank you for sharing please join me on Activerain. My son lives in your area. Iowa a great place tocall home 

Nov 09, 2014 07:06 AM #7
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainer
70,637

Ken Tharp

Section 1031 Exchanges, Iowa/U.S.
Ask me a question
*
*
*
*
Spam prevention

Additional Information