The average value of an acre of Iowa farmland rose 2% in 2017, according to Iowa State University. Its annual survey, conducted by Dr. Wendong Zhang, pegged the state's average value at $7,326 an acre. The survey findings are similar to recent surveys conducted by the state's REALTORS Land Institute and the Federal Reserve Bank of Chicago.
"The main reason causing this hike in prices this year is the limited supply of farm properties available for sale," says Zhang. In a period of declining land values, land owners thinking about selling their farms tend to pull back from doing so hoping to see a rise in prices later, he noted.
Zhang notes land values in surrounding states are still edging lower. In addition, price projections for the next five years project tight profit margins and low net farm incomes. "So looking ahead, this (the 2% gain) could be just a temporary break in the continuation of weakness and stagnation in farmland prices. "The outlook does not hail that this a bottom in farmland values across the Midwest," he says.
Only four of Iowa’s 99 counties—Fremont, Mills, Montgomery, and Page—reported lower land values this year. Each of those counties reported a decline in value of 0.3%. For the fifth year in a row, Scott and Decatur counties reported the highest and lowest farmland values, respectively. Decatur County reported a value per acre of $3,480, a gain of $37, or about 1.1%, from last year’s report.
Scott County reported a value of $10,497, an increase of $162 per acre, or about 1.6%. Dubuque County reported the largest dollar increase in value with a gain of $335 per acre, and Allamakee and Clayton counties reported the largest percent increase in values at 4.7% each. Of the four counties that reported a decrease in value, Mills County had the largest dollar decrease in value, losing about $25 per acre.
Of the nine crop reporting districts, only the south-central district reported a decrease in average value, with values falling from $4,241 per acre in 2016 to $4,172 in 2017, a loss of 1.6%. The northwest district again showed the highest overall value — $9,388 per acre, up from $9,243 per acre in 2016, a gain of 1.6%. The east-central district showed the largest percentage gain in value, 3.8%, bringing average value there to $8,218.
Statewide, high-, medium- and low-quality farmland values increased 2.0%, 2.2% and 0.5%, respectively. High-quality farmland saw the largest increase in value in the east-central district, 4.2%, and the largest decrease in the south-central district, 1.2%. Medium-quality farmland increased the most in the southeast district, 4.2%, and decreased the most in the south-central district, losing 1.2%. Low-quality farmland gained the most value in the northwest district, 3.3% and decreased the most in the southwest district, where it fell 6.1%.