2024 could go down as the worst financial year for farmers since 2007, and more than half of the ag economists surveyed in the Ag Economists’ Monthly Monitor think agriculture is already in a recession. But don’t tell the Iowa and Missouri land markets that. Two land sales last week came in at a whopping $17,000 per acre, and one in Iowa topped $20,0000 this week.
The sheer dollar amount of all three sales is notable, but the biggest surprise was the sale in Iowa County, Iowa.
It consisted of three tracts, the first of which sold for $17,000.
According to Jim Rothermich, a farmland appraiser with Iowa Appraisal, what makes this sale so surprising is the land has been in CRP for 40 years.
“It’s very rare for something like that to happen,” Rothermich says. “I talked to the auctioneer after the auction to get the results. When he told me the results, I almost dropped the phone. The land is south of Williamsburg, Iowa. There are some pretty good buyers in that area, and not a lot of land comes up for sale. Two local buyers got in a bidding war and ran the price right up to $17,000 an acre.”
Not only was the land in CRP for four decades, but it still has several years left on the contract, according to Rothermich.
“That’s just amazing it sold that high because usually CRP is discounted,” he says.
Rothermich says the other aspect to note about the sale is location matters. The ground was sold in three tracts, and only the first tract went for $17,000. The other two tracts sold for half that.
“There again, location matters. That tract of land, it was 160 acres, and those two guys wanted it. The other two tracts didn’t sell as high because for some reason they didn’t want to compete for it,” Rothermich says.
Why Are Farmers Still Paying These Prices?
Two years ago, it seemed $20,000 per acre farmland would be the new norm. As record sale after record sale was recorded, the question became: how high will these land prices go? Today, the number of these high-dollar sales have slowed, but they’re still happening in spite of commodity prices remaining below break-even for many farmers. So, why?
“There’s still money out here in the country wanting to buy land. It’s not as much as it was a couple years ago when everybody was flush with cash, but we still have some people who still have the cash and wherewithal to buy land and there’s still a lot of demand to buy land,” Rothermich says.
The land appraiser says we’re still seeing strong prices for farmland, but the overall trend is prices are gradually going lower.
It’s not crashing, but gradually over time, it’s starting to go lower,” he says. “But we still are seeing some outrageous sale prices. There was one sale yesterday in Sioux County, Iowa, that brought $20,500 an acre.”
The One Major Warning Sign: Number of No Sales
The other warning sign in the land market currently taking shape is the number of no sales. Rothermich tracks all the land auctions across Iowa and keeps monthly totals. In September, he saw a large uptick in the number of no sales.
“There were 14 no sales in Iowa. That’s a high number. Looking at my data over time, you want to either have a stable market or an increasing market. The number no sales range from 0 to 3. So to go to 14 in one month that’s high. That tells me the market is adjusting to current economic conditions,” he says.
Rothermich says if in the position to buy, there will be some good opportunities over the next five weeks. He calls it the most active time for auctions.
“If you do your research and know where land values are at, there’s going to be opportunities to buy farmland at a discounted price,” he says.
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