Farmland Market Outlook for 2022
What Will the Farmland Market Look Like This Year?
As a farmland auctioneer, the number one question I have been hearing recently from farmland owners is, “What will the farmland market look like this year and will land values keep increasing this year?”
Although I cannot predict the future unfortunately, I do believe the farmland market and prices will stay strong this first part of the year up till planting season. After May, my confidence of where farmland prices will be decreases due to many factors that affect farmland prices. Here is what I do know from research and trends of what happened last year that is a good predictor of where farmland values will go in this new year.
Farmland Auctioneer and Agent
Rachel is a licensed real estate salesperson specializing in the sale of farm, land, and rural residential real estate. She is a graduate of Iowa State University with a major in Animal Science and a minor in Agricultural Business. Rachel has a strong interest in valuations and appraisal of rural properties and studied Rural Property Appraisal at Iowa State. She also works for DreamDirt as the Online Auction Coordinator building and facilitating their online land and equipment auctions.
Email: firstname.lastname@example.org | Phone: (515) 954-8063
Reflection of 2021 Farmland Market
Before we talk about where farmland prices are headed in 2022, let us take a look at what farmland prices did in 2021. I’m going to use a farmland value survey that was conducted by Iowa State University for reference. We are an Iowa based land company, and I’m a graduate of Iowa State – Go Cyclones! At DreamDirt, we are licensed to sell real estate and conduct auctions in Iowa plus surrounding states including Nebraska, South Dakota, North Dakota, Missouri, and Kansas. Even though I’ll be discussing Iowa Farmland Values today, majority of the U.S. also saw an increase in farmland prices during 2021.
In Iowa, according to Iowa State University’s Land Survey Study from November 2020 – November 2021, we saw an 29% increase in farmland prices across the state! To put this into perspective, the 2020 survey only say a 3% increase! The survey included a state average price per acre of $9,751. Which is up $2,193/acre compared to last year! This was a historic high from 1942 when the survey was first conducted! Results from the study also shows price increases and averages per district and county level. Prices can all be found on our main page under Detailed Iowa Farmland Price Per County section with the map of Iowa.
Factors that Affect the Increase and Decrease in Farmland Values:
I’ve been a farmland auctioneer and real estate agent with DreamDirt for a few years now. This past year was one for the books with record auction prices! 2020 was a hard year for all with COVID restrictions. However, farmland sales started to pick up towards the end of 2020 and really took off in 2021! There were not very many farms for sale in 2020. This made demand strong for any farmland that hit the open market – creating strong values.
Online auctions became more popular in 2020 and continued into 2021. At DreamDirt, we have been selling farmland online for 10 years now! We were the pioneers of selling farmland online so it was not new to use. Our online auctions are proven to be powerful! Our team understand how they work, and we own our own bidding software which many of our competitors don’t have! We also still offer live in-person bidding auctions. If you’re deciding what’s best for you an online or live auction check out this blog!
Online Farm Auction Technology
The value of technology helped prices increase. There was more use of online presence for prospecting buyers to see. Also, the ease of bidding online instead of showing up live in-person for conveniency increased bidding numbers. We often hear from our online bidders that hitting the bid button became addicting! They didn’t want to loose the farm, so they kept bidding – “just one more time”.
Farm Commodity Market
The commodity market and prices of corn and beans really played a factor in farmland prices. In June 2021, is when we started to see the effects of commodity prices play into farmland prices. With increasing commodity prices, demand for farmland increased resulting in higher prices of good tillable land. Demand continued to be strong throughout harvest and at the end of the year.
Low interest rates has had a significant effect on farmland values. With more buying capacity, both farmers and investors demand for buying land increased. The competition between bidders resulted in record breaking prices!
Capital Gains Tax
The tax policy increase proposal from the new president encouraged sellers to sell this past year. Due to estate inheritance and capital gains. Although we won’t see the Estate Tax increase this year, sellers might take advantage of selling before 2026 when it is brought back to attention.
Is now a good time to sell farmland?
Have you been waiting for the best time to sell farmland? I believe sellers that were on the fence of selling the past couple of years realized NOW is the time to sell! They are taking advantage of the high prices while they’re here! Jim Rothermich, an appraiser from Iowa, kept track of all the acres auctioned in 2021. Which was a total of 142, 756 acres! There truly is no wrong time of year to sell farmland. If you’ve recently inherited land, looking to retire, or needing financial relief, the best time is when it’s right for you! Heck, you can even sell farmland when there’s crop in the ground during the summer!
Future of farmland prices
Riight now we know where the market is for farmland. Six months from now my confidence in prices staying high goes down. We don’t know where interest rates and commodity prices are going. Which play a huge factor. Inflation might also play into increase in farmland values this coming year. Now is a great time to sell especially before the new crop season. If you do have a tenant on the farm, don’t worry. We can structure your sale to accommodate the farm lease for 2022 crop season.
How much is farmland worth?
If you’re thinking of selling land – a great place to start is by requesting both a free market evaluation consultation and our ebooks! Email me at Rachel@DreamDirt.com or call/text me at 515-954-8063 to receive more valuable information!
Iowa Farmland Prices September 17th - 23rd, 2022 There was a total of 29 tillable farmland auctions that happened this week in Iowa. A total of 4,135.82 acres were sold. The average price per acre for the 29 auctions is $14,031/acre and $176.64/CSR2 point. Learn more...
Iowa Farmland Prices September 10th - 16th, 2022 There was a total of 15 tillable farmland auctions that happened this week in Iowa. A total of 1,713 acres were sold. The average price per acre for the 15 auctions is $11,319/acre and $146.95/CSR2 point. Learn more...
Iowa Farmland Prices September 3rd - 9th, 2022 There was a total of 18 tillable farmland auctions that happened this week in Iowa. A total of 2,511.96 acres were sold. The average price per acre for the 18 auctions is $11,831/acre and $155.19/CSR2 point. Top Selling...