Beyond anecdotes, confirmation of the strength in demand for quality Midwest farmland comes from the annual land value surveys of local real estate agents. The Iowa Realtors Land Institute’s twice-a-year survey of members found that Iowa cropland values rose 5.7% during the six-month period ending Sept. 1. That gain, coupled with the 2.7% increase reported in a prior survey, results in an annual increase of 8.5%.
Troy Louwagie of Hertz Real Estate Services, Mount Vernon, Iowa, who leads the survey committee, says a review of surveys yielded mixed views on the land market. Some of that mixed response may be a result of the sharp decline in sale offerings, which makes it difficult to get a reading on market trends. “But I’ve seen high-quality land gain as much as $1,000 an acre in just six months,” Louwagie says.
Each year, 1st Farm Credit Services, Normal, Ill., gathers an update from the organization’s 14 appraisers in Illinois. The lender found the value of Class A farmland rose an average of 4%, Class B farmland rose an average of 5.1% and Class C ground rose 2.4%. Farms are classed based on their soil’s average productivity index: Class A ranges from 133 to 147 PI; Class B, from 117 to 132; and Class C, from 100 to 116.
The lender’s findings mirror survey results for Illinois reported by the Federal Reserve Bank of Chicago, which found land values in the upper two-thirds of the state rose 5% for the year ending June 30, 2010. Similar gains were reported by the update conducted by Farm Credit Services of Illinois.
Cash Rents Still Top Leasing Choice
The Illinois Society of Professional Farm Managers and Rural Appraisers’ (ISPMRA) land value survey shows fixed cash rent still leads as the choice for leasing arrangements. Variable cash rental arrangements are expected to increase in use in 2011 by 65%, according to survey respondents.