Iowa farmland values up, survey shows (complete article from source)
Source: Des Moines Register, by Jerry Perkins
March 19, 2008
Iowa’s best farmland rose in price by an average 12 percent during the previous six months to $5,223 an acre, according to a survey of farmland real estate brokers released Wednesday.
Statewide, the best Iowa farmland rose 21 percent in the year ending March 1, the survey showed.
Farmland is an important component of the investment portfolios of many Iowans, including the heirs of farmers and other landowners.
High land prices are a boon for retiring farmers who want to cash out, but they are cited as a barrier for young people and others trying to buy land to start farming.
Troy Louwagie , survey chairman and real estate coordinator for Hertz Real Estate Services in Mt. Vernon, said the survey showed continuing strength in Iowa’s farmland market.
"This was the highest dollar per acre number we’ve ever had, the second highest six-month gain and the third highest annual increase over the last 30 years since the survey began,” Louwagie said.
Iowa has seven districts exceeding $5,000 an acre, and last September there was just one district where high-quality land exceeded $5,000, he said.
Each of Iowa’s nine crop reporting districts showed increases, the survey showed, with west central Iowa showing the highest average price at $5,630 per acre.
Timber land in Iowa, often purchased by people looking for hunting or recreational properties, rose 12 percent to an average of $2,045 an acre during the six months ended March 1, the survey showed.
Survey participants were asked to estimate the average price of an acre of farmland as of March 1.
Those who responded to the survey said continued increases in corn and soybean prices, the expansion of Iowa’s ethanol industry, the limited amount of land offered for sale, good crop yields last year and a positive attitude about agriculture contributed to the increase in farmland price, Louwagie said.
Other positive influences on the farmland market included relatively low long-term interest rates and higher cash rent for farmland, he said.
Concerns mentioned by survey respondents included uncertainty about the government farm program being debated in Congress, increased fuel and fertilizer costs and decreasing returns in the livestock industry.
The survey has been conducted every March and September since 1978 by the Iowa Farm and Land Chapter 2 Realtors Land Institute, which is composed of real estate brokers who specialize in farm and land sales, farm management and appraisals.
The land institute’s survey is consistent with land surveys conducted by the Federal Reserve Bank of Chicago and Iowa State University.
The Chicago Fed’s most recent survey showed that Iowa farmland prices rose 6 percent in the fourth quarter and 18 percent during 2007.
Iowa State University Extension’s annual farmland survey released in December 2007 showed that Iowa farmland prices rose 22 percent during the year ended in November 2007.
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