Recap: 2017 Iowa Farmland Prices
We’ve made it to 2018! Over the course of the year we collect the results of every farmland auction we are aware of across the state. We are confident that we are collecting 95% of the farmland auctions that are occurring but unfortunately there are some auctions that get very little marketing and remain obscure and out of our ability to discover them. As we always do its fun to take a look back through the years results and see what we can learn from those results.
People often ask us what is the best time of year to sell a farm and our answer is pretty consistent that the time of year does not matter. When we look back at 2017 we can see the breakdown month to month with the sale results.
Iowa Farmland Auction Results Month to Month 2017
- January 4600 acres averaged $102 per CSR2 point.
- February 5309 acres averaged $96 per CSR2 point.
- March 6013 acres averaged $106 per CSR2 point.
- April 3948 acres averaged $82 per CSR2 point.
- May 1265 acres averaged $110 per CSR2 point.
- June 4753 acres averaged $114 per CSR2 point.
- July 2493 acres averaged $96 per CSR2 point.
- August 4499 acres averaged $101 per CSR2 point.
- September 9426 acres averaged $101 per CSR2 point.
- October 3919 acres averaged $107 per CSR2 point.
- November 17,979 Acres averaged $109 per CSR2 point.
- December 9513 acres averaged $100 per CSR2 point.
As you can see there is not a tremendous difference from month to month and any differences are likely due to differences in quality of farms or CSR2 ratings on the farm offered in a particular month. Most people believe the off season during winter is the best time of year to offer a farm for sale but when you see the results above it might paint a picture for a late Spring auction where prices were $110 and $114 average per CSR2 per month. When you look at the traditional farmland sales season you see $109, $100 and $102 in the previous January. The truth is every year is different and there is no predicting how to exactly time a farmland auction and like I said the variations are likely caused by the make up of farms in that given month.
Price Per Tillable Acre of Iowa Farmland
Something we know well is that not all acres are created equal and we sometimes state figures in “price per tillable acre” Tillable acres are the most valuable and will sell for the most money because they can create income. Non-tillable acres will be discounted by a buyer when buying a farm in most cases. These acres might be water ways, roads and ditches, timber, building sites, or ground thats just not farmable. We always take the ratio of tillable versus non-tillable acres into consideration when helping a client value their farm. Based on all of the farmland auction sale results we collected in 2017 the average price of a tillable acre in Iowa was $8804 per acre.
Iowa Farmland Auctions Numbers by Month in 2017
- January 35 Parcels Sold
- February 47 Parcels Sold
- March 59 Parcels Sold
- April 40 Parcels Sold
- May 15 Parcels Sold
- June 54 Parcels Sold
- July 21 Parcels Sold
- August 43 Parcels Sold
- September 90 Parcels Sold
- October 38 Parcels Sold
- November 161 Parcels Sold
- December 86 Parcels Sold
Overall we can use our statistics and data to determine an average price per acre statewide. In total 73,718 Acres were successfully sold at auction in Iowa 2017 for $539,861,477 for a statewide average of $7323 per acre.
We recently wrote about the Iowa State University 2017 Iowa Land Values Survey which was released mid December 2017. That report is a November through October survey which is slightly different than our Jan through December results. The ISU survey results are based on “estimates and opinions” while our result is based on actual sale results. The ISU survey for 2017 was $7326 this year which was within $3 per acre of our final results. The numbers really look good side by side and give a really clear picture of the farmland market today.
Farmland Auction No-Sales
A No-Sale is when a farm is put up for auction but fails to sell, typically because it did not meet the sellers reserved price. Nobody likes a no-sale auction and again in 2017 they were a rarity. 29 parcels on 20 different auctions were not sold at the auctions we tracked. 689 parcels successfully sold during the auction and 29 did not. Out of the 718 total parcels offered 95.96% of the farms sold during the auction and 4.03% did not sell. A fair portion of that 4.03% were likely sold fairly quickly after the auction as is very typical. We think thats an amazing compliment to the auction method of marketing that is can produce successful results at such a high rate all across the state. When you consider that around 55% of farms sell by auction and only 17% sell by private listing with a Real Estate agent its easy to see why knowing that auctions are producing such impressive results.
Contributing Factors to Farmland Prices in Iowa
2017 was a low sales volume year. Novembers numbers helped move the average on the number of parcels sold up but 2017 farmland prices were really driving by lack of supply. Buyers were hungry for new farms and the poor supply of farmland listings right now is keeping prices higher than most would expect they should be right now. They seem to defy gravity.
We still are experiencing very reasonable interest rates which helps hold farmland prices higher. As interest rates move up they will put pressure on farmland values and while a farmer may still expend the same number of dollars on a farm, it will be the seller seeing less of it and the bank seeing more.
Investor participation is still not high but its present and its playing a role in the farmland market. The fact Iowa has low property taxes and several high property tax neighbors border areas especially are seeing more pressure from investors crossing borders to park money in Iowa. It seems the closer your farm is to Minnesota, Nebraska or Illinois the more likely you are to see investor participation in the auction.
Are You Going to Be Selling Farmland?
DreamDirt offers one of a kind services you can only get at DreamDirt and our team is unique in the fact that all we offer is farmland auction and farmland brokerage services and we really understand the farmland market. We have our finger on the pulse of the market daily and we can help guide your farmland sale to a smooth and successful sale. If we can help you value your farm and explain the process of selling please click the graphic to get started or give us a call at 712-592-8965Want to start the process of selling a farm with DreamDirt? Get a free Market Analysis first.