Land values in Iowa increased in 2013
Iowa farmland value has increased by 5.1 percent, according to the results of the Iowa Land Value Survey.
Values have increased for the year of 2013, which is the fourth year in a row and has achieved historic peaks.
Scott County, which has an average value of $12,413 for an average value of farmland, saw the highest average county values in the Iowa State survey. Scott County also had the highest percentage increase and highest increase in value, 12.45 percent and $1,374 respectively, of the 99 Iowa counties.
“The 2013 land value survey shows a market in flux, with strong and weak price sales occurring at the same time,” said Micahel Duffy, Iowa State economics professor and extension farm management economist who conducts the survey. “The key question is if this shows the market is going to settle, if it is just pausing before another takeoff in values, or if the market has peaked and due for a correction.”
According to Duffy, examining some of the causes for the current increase in farmland values and the reactions is helpful in assessing the situation. Farmland values are highly correlated with gross farm income. A majority of the survey respondents were concerned about income. Over three-fourths (76 percent) of the respondents cited lower commodity prices as a negative factor affect the land markets.
Iowa corn and soybean price movements are good indicators of gross farm income movement. There was a 33 percent drop in the Iowa average corn price from October 2012 to October 2013 and there was an 11 percent drop in soybean prices over the same time period. The November estimated price for Iowa corn was 39 percent lower than the November 2012 price. Soybean prices were 11 percent lower.
“Farm income is a strong indicator for the direction land values will go, but there are other factors as well,” Duffy said. “Interest rates remain low, but the percent of respondents who reported less sales than in 2012 was the highest it’s been since 1985.”
The odds are against a major collapse in land values, but if projections of a new lower level for commodity prices hold, then Duffy believes we should expect values to drop.
Decatur County remained the lowest reported land value at $3,628 per acre. O’Brien County, which showed the highest county average value and greatest dollar increase in 2012, showed the highest dollar increase in 2013 of $478.
Osceola, Dickinson and Lyon counties along with O’Brien County all shared the highest percentage increase in 2012 and the greatest percentage decrease in 2013, with 3.72 percent.
Low-grade land in the state averaged $5,298 per acre and showed a 3.5 percent increase or $179 per acre, while medium grade land averaged $8,047 per acre; high-grade land averaged $10,828 per acre.
The Iowa Land Value Survey was initiated in 1941 and is sponsored by the Iowa Agriculture and Home Economics Experiment Station, Iowa State University. Only the state average and the district averages are based directly on the Iowa State survey data.
The survey is based on reports by licensed real estate brokers and selected individuals considered knowledgeable of land market conditions. The 2013 survey is based on 476 usable responses providing 674 county land value estimates. The survey is intended to provide information on general land value trends, geographical land price relationships and factors influencing the Iowa land market.