Iowa Farmland Prices Continue Slow Decline

Sep 16, 2016 | Farmland Prices, Iowa Auctioneers, Iowa Farmland Prices

Jason Smith

Jason Smith

Auctioneer, Land Broker

Jason is an Auctioneer and Land Broker and the founder of DreamDirt, He is a lead farm real estate professional in the Midwest and has pioneered many modern methods of selling farmland. His experience in helping lead families to successful farmland transactions spans 2 decades.  

Email: jason@dreamdirt.com | Phone: (515) 537-6633

Iowa Farmland Prices Decline

It almost seems like old news at this point but the value of Iowa Farmland continues to decline.  Certainly an important issue to many people and today we have new updated information coming out from the Realtors Land Institute, an association of farmland brokers and auctioneers from around the state of Iowa.

The report is a 6 month report from March to September but shows that over the last 12 months farmland sales have dropped an average of 8.7%.  For this 6 month period from March 2016 to September 2016 the decrease was 3.7%. The previous 6 month period showed a decline of 5.0% in Iowa farmland values.  The difference in the figures shows a slower devaluation during the crop growing season and is likely a result of the very low sales volume over the past 6 months.  The upcoming 6 month period is likely to result in a higher volume of sales because of the crop season and Iowa’s tenancy laws lend themselves to fall and winter sales.

If you look back at data from 2013 as this decline began the numbers tell us that todays current average is 25-30% less than the market highs set 3 years ago.  To understand the rate of decline you can use that 25-30% divided by the 36 month period to see our rate of value decline in Iowa farmland is averaging 0.69% to 0.83% per month.   If you have an imminent farmland sale coming you can drill that down to the day using a 30 day month and see that farmland is currently losing 2/100th of a percent value per day.

That might not seem like a lot and we have said many times its a very slow decline but over time it adds up.  When somebody tells me “I’m going to wait until Spring and see what is happening” its not hard with the math to see that by Spring using our current rates a farm could be worth 3.8% less than it is today.  A $1,000,000 farm will lose $38,000 in value over that time period.

As you try to time a sale of farmland thats an important number to take into consideration and understand that that rate can accelerate or decelerate based on market conditions.  In the short term its likely to stay the same or accelerate as opposed to decelerate.  I am convinced at this point one of the feet on the brake at this point is the very low number of available farms across the state and probably one of the biggest threats to farmland prices at this point would be the introduction of distressed farms into the market and that potential exists as we move toward the 2017 crop year.  As producers begin to visit with bankers about operating loans for next year we are likely to see some distressed farmland hitting the market.  In the Spring of 2016 we did see some of that however most of it was treated as “off market” properties or “pocket listings” as they are often called and they were not easily available on the open market.  Most were treated as private sales often with no advertising.

Iowa Farmland Prices By Crop Reporting District

Iowa farmland Prices

 

 

September 2016 Iowa Farmland Prices – Survey Results

Iowa Farmland
Prices 09/2016
High Quality
Cropland
Medium Quality
Cropland
Low Quality
Cropland
Non-Tillable
Pasture Acres
Timber
Per Acre
 
Sept March Sept March Sept March Sept March Sept March %
Central Iowa $9,219 $9,594 $6,716 $6,894 $4,265 $4,330 $2,719 $2,829 $2,343 $2,413 -3.0%
East Central $9,524 $10,009 $6,922 $7,166 $4,260 $4,460 $2,661 $2,732 $2,116 $2,130 -4.3%
North Central $8,676 $9,054 $6,566 $6,883 $4,469 $4,703 $2,223 $2,260 $1,696 $1,751 -4.5%
Northeast Iowa $8,856 $9,096 $6,613 $6,734 $4,246 $4,365 $2,596 $2,600 $2,496 $2,509 -2.4%
Northwest Iowa $10,673 $10,977 $7,793 $8,078 $4,775 $4,914 $2,827 $2,936 $2,294 $2,319 -3.0%
South Central $6,702 $6,905 $4,496 $4,633 $3,035 $3,050 $2,700 $2,731 $2,629 $2,515 -2.4%
Southeast Iowa $9,160 $9,342 $5,885 $6,225 $3,652 $3,728 $2,342 $2,375 $2,091 $1,990 -3.1%
Southwest Iowa $7,618 $8,167 $5,956 $6,272 $4,432 $4,671 $3,357 $3,467 $2,183 $2,200 -5.8%
West Central $8,866 $9,283 $6,952 $7,352 $4,787 $5,038 $2,758 $2,833 $2,342 $2,274 -4.9%
State of Iowa $8,811 $9,158 $6,433 $6,693 $4,214 $4,362 $2,687 $2,715 $2,243 $2,233 -3.7%

Download this chart as a PDF Iowa Farmland Prices Decline

Looking for information on land prices in a particular county in Iowa?  We have a full accounting of all 99 Iowa Counties including dollars per CSR point and average farmland rent in each county at www.DollarsAndDirt.com

Iowa Farmland Prices Decline is written by:  Jason Smith, CAI is a licensed real estate broker and auctioneer specializing in farmland real estate transactions.  You can reach Jason at 712-592-8965 or email Jason@DreamDirt.com

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