An Iowa State University survey of farmland professionals finds them looking for a modest decline in values over next 18 months. The survey, conducted continuously since 1964 in conjunction with the annual Soil Management Land Valuation (SMLV) conference, finds respondents looking for a 2.3% decline in land values from May 1 to Nov. 1, says Extension Economist Wendong Zhang, who conducts the annual conference.
They further expect land values to drop by 1.2% from May 1, 2020, to November 1, 2021, which shows an expected stabilization or modest increase in land values from November 1, 2020, to November 1, 2021. Furthermore, the respondents project the land market to continue to stay stable and gradually increase from 2021 to 2022, he says.
Survey respondents have a rosier outlook for long-run land values, he notes. “They expect, on average, a 10% increase in land values from May 2020 to November 2025, and a 45% increase in land values from May 2020 to November 2040. This echoes the fact that farmland is typically a long-term investment, with half of land in Iowa held by the same owner for over 20 years, as shown in the 2017 Iowa Farmland Ownership and Tenure Survey, he observes.
The annual May conference was originally rescheduled to August due to COVID-19. Zhang surveyed conference attendees ahead of the rescheduled conference. However, the conference was eventually cancelled. Zhang notes that of this year’s respondents, 45% are agricultural lenders, 20% are farm managers, and more than 10% each are realtors or brokers and rural appraisers. They are generally experienced agricultural professionals who have, on average, worked for 26 years and provided service for nine Iowa counties.