The value of an acre of Iowa farmland rose 2% for the six-month period ending Sept. 1, according to the Iowa Chapter of the Realtors Land Institute (RLI). The semiannual survey found values posted stronger increases in the central-to-eastern areas above I-80 due to timely summer rain and limited sales offerings. Values in the western third and southern third each reported smaller increases as dry conditions persist across those areas of the state.
The current gain coupled with the previous six-month rise totals an annual increase of 2.9%, says survey coordinator Kyle Hansen, ALC, Hertz Real Estate Services, Nevada, Iowa. The increase is the first annual gain reported by the RLI survey in three years. It also nearly matches the 3% annual increase through June 30 reported by the Federal Reserve Bank of Chicago’s quarterly survey.
Thin Market, Driven Buyers. A lack of properties available to the market impacted Iowa values, notes Hansen. While the survey shows values stabilizing, he says, there is considerable volatility in the market.
Two recent auctions in Story County resulted in sale prices that were more than $3,000 per acre apart, Hansen says. Yet the auctions occurred within a few weeks, and the two properties offered comparable soils. However, one featured waterways and “cut up” fields while the other had no waterways and competitive bidding between an investor and neighboring farmer.
A boost in 1031 buyer interest contributed to the demand for the limited number of offerings in the east-central area this summer, adds Troy Louwagie, ALC, Hertz Real Estate Services, Mt. Vernon, Iowa. But he is not aware of another round of 1031 buyers waiting in the wings for this winter’s market.
On a land-quality basis, the survey found the value of high-quality cropland rose 2% to an average of $9,078
per acre. The value of medium-quality land rose 1.8% to an average value of $6,655. The value of low-quality cropland increased 2.2% to an average of $4,349 per acre.
The value of non-tillable pasture land rose 1% during the six-month period and 1.7% versus September 2016. Timber land posted a 2.4% gain and an annual increase of 3.1%.
As for the future of Iowa’s farmland values, Hansen says commodity prices and yields will be a driving factor, as well as the volume of land on the market.
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