Average Value of Iowa Farmland Increases 15.9% In 2010

A recent survey conducted by Iowa State University (ISU) Extension, Mike Duffy, an ISU Extension economist who conducted the survey, said the statewide average farmland land value as of Nov. 1 in Iowa was $5,064 an acre, up $693 per acre from 2009. The 2010 survey shows a substantial increase in land values following a drop in 2009.

“We need to watch the land values and be prudent, but I don’t think we need to be overly pessimistic there will be a crash in values anytime soon,” said Duffy. “The rate of increase in 2010 appears high, but it is half the yearly increases in 1973, 1974 and 1975.”

Duffy said it is important to remember the time span when evaluating survey results. “This has been especially true the past few years when corn and soybean prices have varied considerably. Monthly prices for corn averaged 37 percent higher July to November this year compared to average monthly prices from January through June. Soybean prices are 21 percent higher over the same time span,” Duffy said.

Of the nine crop reporting districts in the state, the survey found the highest land values were reported for Northwest Iowa at $6,356 per acre; the lowest land values were reported for South Central Iowa at $2,690 per acre.

The highest county average in the state was O’Brien County at $7,148 per acre, up 16.2% from 2009. Decatur County had the lowest average at $2,085 per acre and the lowest dollar increase at $128 per acre. The greatest dollar increase was $1,152 in Wright County; the highest percentage increase was in Kossuth County at 21.9%.

Duffy said land values should remain strong at least for the next several months. Beyond that there is a fair degree of uncertainty with respect to whether land values can maintain their current levels.

The volatility in corn and soybean prices and production costs lead to tremendous uncertainty and volatility in the land market, as historically reflected in the Iowa State survey. Land values were up 22% in 2007, down 2.2% in 2009 and up 15.9% in 2010. Since 2004, Iowa land values are up 93%. ◆