Survey: Iowa Cropland Surges 20% In Six Months
Mar 22, 2011
The value of an acre of Iowa cropland rose 19.7% between September 1 and March 1, according to a survey conducted by the Iowa Farm and Land Chapter #2 REALTORS® Land Institute (RLI). Combining that 19.7% increase with the 5.7% gain reported in September for the March-to-September, 2010 period indicates a statewide average increase of 25.4% for year from March 1, 2010 to March 1, 2011. Troy Louwagie, ALC, Hertz Farm Management, Mt. Vernon, Iowa, who heads up the survey team for the RLI, said the current percent gains are the highest six-month and 12-month increases ever reported by the RLI survey. The RLI has conducted the survey since 1978. Louwagie did indicate the annual Iowa Land Values Survey conducted by Iowa State University reported annual increases in excess of 30% in 1973, 1974 and 1975 -- years prior the start-up of the RLI survey.
The RLI divides cropland into three categories based on soil quality -- high, medium and low quality. The survey pegged the statewide average value of high quality cropland at $7,389 an acre, up 20.6% from September. The survey found two of the state's nine crop reporting districts listed a district-wide average in excess of $8,000 an acre for high quality cropland. These were the northwest crop district, $8,193 an acre, and the west central district, $8, 165 an acre. Five of the nine districts reported an average in excess of $7,000 an acre but less than $8,000 an acre for high-quality cropland. The southwest district reported an average of $6,770 an acre for high-quality cropland. The south central district had the lowest reported average, $5,904 an acre, for high-quality land.
The value of medium-quality cropland rose 18.6% to a statewide average of $5,700 an acre. The value of low-quality cropland rose 19.7% to a statewide average of $4,034 an acre.
The survey also indicated the value of non-tillable pasture land rose 9.9% to a statewide average of $2,213 an acre while the value of timber land rose 9.4% to a statewide average of $1,995 an acre. The survey found the demand for recreational land continues to be weak. "Recreational land is not selling well," Louwagie said.
Positive factors influencing the land market cited by the survey include: strong commodity prices, favorable long term interest rates, limited amount of land offered for sale, lack of attractive alternative investments, higher livestock prices, view of land as a safe investment and fear of inflation. "High quality, well-drained, productive farms continue to sell the best," Louwagie said.
Negative factors influencing the land market included: higher input costs, fear of a farmland bubble, tighter credit, continued uncertainty in the U.S. and world economy, high land prices.
The survey also found that 70% to 80% of buyers were farmers -- either active or retired.
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