Iowa land values up 2.3%12/13/2019 | Soybean News, Economics
By Bethany Baratta, ISA senior writer
Favorable interest rates, strong yields and limited land supply provided support to lift land values in Iowa. Results from the Iowa State University (ISU) Land Value Survey, issued this week, propped the state’s average land value 2.3% over 2018 to $7,432 per acre.
The $168-per-acre increase over 2018 represents the second time in six years Iowa farmland value increased since the peak at $8,716 per acre in 2013.
“This recent rise is largely attributable to lower interest rates, limited land supply, strong yields, and to some extent the trade aid payments to farmers,” said Wendong Zhang, Iowa State University assistant professor of economics and ISU Extension Economist. “On the other hand, the magnitude of this increase only slightly outpaced inflation, and we are still faced with low commodity prices and trade uncertainty.”
The 2019 survey results are based on 679 county-level value estimates provided by 553 agricultural professionals, mostly ag lenders and broker/realtors. Started in 1941, the survey is the only one which provides estimates for all of Iowa’s 99 counties.
The survey has been conducted by the Center for Agricultural and Rural Development in the Department of Economics at Iowa State University and Iowa State University Extension and Outreach since 2014.
The groups used the following formula to determine the increase/decline in value of each county: land value = localized net income ÷ universal interest rate.
In using this formula, the survey showed a decline in land values in only the Northeast crop reporting district, survey results show. That 2.9% decline, Zhang said, is “mainly driven by continued low milk prices and financial stress in the dairy sector.”
The largest percentage increases were in the East Central and Central districts, 5.9% and 5.5%, respectively.
“Those increases could be driven by stronger demand for urban transitional land, especially recreational demand for lower quality land, as well as stronger yields over the past few years, especially last year,” Zhang said.
The highest value was estimated for Scott County, at $10,837 per acre, driven in part by its location in relation to the Quad Cities and its proximity to the Mississippi River and associated markets, Zhang said.
The lowest land value in the 2019 survey was in Decatur County at $3,586 per acre.
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