Iowa Farmland Prices Report October 15, 2021

Look at the spreads this week on farmland prices in Iowa. This week we see a much more pronounced spread with a low of $87.82 per CSR2 point in Monona County and a high of $200.55 in Mahaska County.  I think that may be the biggest one week spread in lowest to highest farmland prices I have witnessed.  Still, the core of our farmland prices this week remains between $130 and $160 per point.  The average of all farmland sales this week was down slightly but landed at a very hefty $154.24 per CSR2 point and that was a solid test on 3,592 acres sold.  The most impressive aspect of this weeks sales, an average farmland price in Iowa of $12,366.07 per acre!  That is incredible when you consider that the last Iowa State University report in December 2020 came in at $7,551 and the NASS report back in August 2021 indicated an average price of land of $7,740.  This shows the recent explosion in farmland prices across the state of Iowa fueled by higher commodity prices, low interest rates and a long period of low sales volume.  While many of those positive factors were set up and in place for this to happen, the market reaction will always be to drive prices down by introducing factors to the market that counter those pre-existing elements.  The added element of investors in the market is almost like a tornado inside of a tornado.

Many investors have had a good run in the stock market lately but many of them are growing more fearful and while the situation continues to materialize what we are seeing in Iowa’s farmland market is a fair amount of profit taking from land holdings where investors are selling off farmland they have held to take advantage of the high prices but seeming to find the only option they have with the proceeds is to go back to land so you have investors in the market as both buyers and sellers right now.  Again, very similar to what we experienced in 2011-2013.

Week after week, I have said eventually the supply will meet the demand.  We are on that path now.  I spent a few hours this week taking inventory and could find over 307 high quality farms that are available or will be sold before the end of the year.  Every day since I have either signed up new sellers for auctions or saw others hitting the market.  That will pressure the top prices we are seeing, to what extent – we won’t know for a few months. I suspect we’ll see it slow over our weekly reporting.