Iowa Land Values Decline For First Time In Decade

Published on: 22:29PM Dec 16, 2009

Mike Walsten

Iowa State University's annual land values survey confirmed what we've been telling LandOwner subscribers, that the correction in land values is over. The survey found land values declined just 2% as of year-end 2009 versus a year earlier, posting the first decline in land values in ten years. However, the 2% decrease follows declines of 7% to nearly 8% on an annual basis reported by surveys taken in September. The moderate annual decrease in the ISU survey reflects the strength that has entered the market since spring and gained steam this fall. ISU's Mike Duffy, who conducts the annual survey, makes the same observation in his press release. Click here to access the complete press release.

Portions of the press release follow:

AMES, Iowa -- The average value of an acre of farmland in Iowa declined in 2009 for the first time in a decade, according to an annual survey conducted by Iowa State University Extension. Mike Duffy, ISU Extension farm economist who conducts the survey, said the statewide average as of Nov. 1 this year was $4,371 an acre, down 2.2 percent or $97 from the 2008 figure of $4,468.

The last time the statewide average dropped was in 1999, when the survey reported the average was $1,781 an acre, or $20 less than in 1998. In the decade since 1999, owners of Iowa farmland have watched their holdings increase in value by 145 percent on average.

Duffy said the slight decrease in 2009 in the ISU survey may contain some good news compared to other surveys that look at land values in Iowa. He noted the 2.2 percent decline covered sales for the time period between November 2008 and November 2009. It compared with a 7.6 percent decrease reported by the Realtors Land Institute for a survey covering the period from September 2008 to March 2009, and a 7 percent decrease from October 2008 to October 2009 reported by the Seventh District of the Federal Reserve Board. The Federal Reserve Board report included an increase of 4 percent from July to October of 2009.

“The decrease in land values appears to have stopped,” Duffy said. “The situation has stabilized but for how long is unknown.”

While land values on average declined slightly in 2009, the survey reported that 14 counties showed increases. The counties with increases included several in east central Iowa where the 2008 flooding held down the gains shown in other parts of the state last year.

Duffy said the recent trends in the value of Iowa land are not surprising given the relative change in the value of crops produced in Iowa over the past few years. “The value of corn production in Iowa increased 64 percent from 2006 to 2007, but decreased 15 percent from 2007 to 2008, based on year-end summaries by the U.S. Department of Agriculture,” Duffy said. The value of the soybean crop increased 40 percent two years ago and then decreased 9 percent last year. Year-end reports are likely to show additional declines in total crop income, based on crop prices and the difficult harvest, Duffy said.

The survey also found a major decrease in the amount of land sold during the past year. The trend toward greater demand for higher quality land continued, and there also was an increase in the percentage of land being purchased by existing farmers, correlating with a decline in investor land purchases.

Of the nine crop reporting districts in the state, Northwest Iowa reported the highest average value at $5,364 per acre. The lowest average in the state was in South Central Iowa at $2,537 per acre. The only district that showed an increase over 2008 was East Central, up 1.1 percent

The highest county average in the state was Scott County at $6,361 per acre, up 0.8 percent from last year when it also was the highest. Decatur County was lowest at $1,957 per acre. Lyon County led the state with the largest dollar increase at $237 per acre, while Allamakee County had the largest percentage increase at 5.7 percent. The greatest dollar and percentage decreases were $384 and 6.6 percent, both in Black Hawk County.

Low grade land in the state averaged $2,884 per acre, a decrease of $83 or 2.8 percent over the 2008 survey. Medium grade land averaged $4,076 per acre, a $119 decrease or 2.8 percent.  High grade land averaged $5,321 per acre, a decrease of $60 or 1.1 percent.

If interested in seeing a copy of LandOwner, just drop me an email at [email protected] or call 800-772-0023. Or click here to access the full report.