Your Precious Land
Mike Walsten has covered major business trends in agriculture for more than 40 years.
Land Pros Report 5% Slip in Iowa Farmland Values
Mar 27, 2014
The average value of an acre of Iowa farmland slipped 5.4% from September 2013 to March 2014, according to the semi-annual survey conducted by the Iowa Chapter of REALTORS Land Institute (RLI). Combining the 5.4% six-month decline with the 1.2% increase reported in the six months preceding Sept. 1 indicates a statewide average decrease of 4.2% for the year ending March 1.
"The decline reported by the survey is the first six-month decrease and annual decline since 2009," reports Kyle Hansen, Hertz Real Estate Services, Nevada, and survey coordinator. "The September survey showed a few crop reporting districts reporting declines in farmland values. But this is the first to show a decrease on a statewide basis since 2009," he adds.
All nine crop reporting districts showed decreases during the past six months. The districts varied from a 2.1% decline in southwest Iowa to a 8.4% decrease in southeast Iowa. The survey found an acre of high-quality Iowa cropland averaged $11,104 on March 1, down 4.9% from Sept. 1. The value of an acre of medium-quality cropland averaged $8,323, according to the survey, down 5.6% from Sept. 1. The survey found an acre of low-quality cropland fell 6.1% from Sept. 1 to a statewide average of $5,432.
The survey found the value of pasture land and timber land rose compared to six months earlier. The gains reflect a rising demand for grass for cattle operations, renewed interest in hunting and fishing land by urbanites and demand from conservation agencies developing public recreational areas. The value of pasture rose 2.2% to $2,736 an acre while the value to timber rose 2.6% to $2,268 an acre. Leading gains was the southwest crop district which saw the average value of pastureland rise 9.7% over the past six months and the value to timber ground surge 28%.
Factors contributing to the decrease in farmland values include, according to survey responses: lower commodity prices, higher input costs, government regulation uncertainty and uncertainty of the U.S. and world economy. Positive factors cited include: low interest rates, limited amount of land offered for sale, strong livestock market, renewed interest from investors, lack of stable alternative investments, cash on hand and fear of inflation.
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