Appraisal Update Finds Cooling Iowa, Nebraska Farmland Markets
Jul 23, 2013
We've talked about the stabilizing process that's underway in the Midwestern farmland market in several recent issues of LandOwner newsletter. Now, new data released to LandOwner from Farm Credit Services of America (FCSAmerica) supports our view.
The Omaha-based lender is the largest ag real estate lender in its four-state service region, which covers Iowa, Nebraska, South Dakota and Wyoming. The association monitors ag real estate value trends through its semi-annual appraisal update of 65 benchmark farms located throughout its service area. Its appraisal team reviews thousands of completed farm real estate transactions in the process.
It's July 1 update shows the value of the 21 Iowa benchmark farms rose slightly more than 6% during the first half of 2013 compared to the 13.8% surge the last half of 2012. The 19 Nebraska benchmark farms show a 7% rise — down from 12.3% the last half of 2012. Those gains amount to about a one-percentage-point gain per month. In our view, that type of increase points to a market that is transitioning into a stabilizing market.
The 23 South Dakota benchmark farms report a 9.5% six-month gain. While down from the astonishing 17.6% burst seen last half of 2012, the 1.6%-per-month increase is too strong to be considered a market that is stabilizing.
The update shows a lift in the value of Wyoming farmland. The update lists a gain of 3.3% for the first half of 2013. That compares to no change in values during the last half of 2012. FCSAmerica says the rise in Wyoming is driven by increases in cropland values that offset slight declines in the value of ranchland in the state.
Additionally, the Iowa market seems to be in the same spot as it was a year earlier. Land values were stabilizing after posting a 6.2% rise the previous six months. But values surged as grain prices rocketed. That does not seem likely this year with soil moisture supplies re-charged. But this crop is not yet in the bin.
However, Nebraska is cooling, too. Its current rise of 7.1% is the first single-digit six-month rise since last half of 2010.
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