Iowa’s Weekly Farmland Sales Report Sept 10th

Kenton and Pam Bates came to their auction with a piece of farm ownership memorabilia.  He had purchased the farm he was selling on Feb 18, 1980 when the average cost of an acre of tillable farmland in the United States was $737 per acre.  In Iowa, that year the average cost of an acre of tillable farmland was $1,840 per acre.  They paid well over the average that day at $2,560 per acre.  Today the average price of farmland in Iowa is $7,559 and their farm sold on a DreamDirt Auction for $13,550 per acre!  At the end of the auction Kenton and Pam were elated to have sold into this market today and achieved such a good price for the farm they worked hard to have and own.  Kenton said he owed a lot of thanks to his high school VocAg teacher Mr. Hunolt that told him “boys don’t be afraid of stepping out and buying a farm.  To many guys wake up, they are 60 years old and have always been a renter”. That says a lot about the upside of being a farmer that is simultaneously an investor.

Iowa Land Prices at A Glance

Our Iowa Farmland Price Heatmaps have been a huge help for people that want to visiuliaze and research farmland prices in Iowa.  Here you can research your farm’s proximity or the statewide market and see individual sale results, average prices per acre, average price per CSR2 point as well as volumes of sales and the number of acres sold.  Use this market price research tool right here at DreamDirt.  Click the Iowa map to get started.

Iowa Farmland Sales News This Week

Not only was it a busy week at DreamDirt this week but across the state, farms changed hands at auctions and by private sales.  We have been helping multiple 1031 clients identify replacement farms and we were successful in locating a farm for one of them this week and negotiating a sale for them as well as conducting two successful land auctions as well as listing several new farms for upcoming auctions later this year!

Corn Prices and Farmland Prices

Other Factors Holding Farmland Prices Higher

It’s no secret that the cost of money or borrowing has a very big impact on what a buyer can pay for farmland.  The truth is, farmland has only one value but how that value gets split up is what will make a difference to the seller of farmland.  The current Effective Federal Funds Rates are very low and the cost for banks to borrow money to loan makes farmland prices higher right now.  It doesn’t change the value, it only changes the price reflected.  The reason for that is because less money goes to the bank or cost of borrowing money, more of it goes to the seller of the farm and is reflected in price rather than cost of the transaction.  I should point out that what you see in the chart is not what a farmer can borrow money for but the Federal Rate becomes a foundation that consumer rates are based on when banks loan or borrow each other liquidity.  These rates are always a moving target.  The Federal Open Market Committee meets 8 times per year to determine the Federal Funds Target Rate which influences the Effective Federal Fund Rates through open market operations or by buying and selling government bonds (debt).  All of this activity will be dictated by the current state of the economy and will dictate to a degree, farmland prices.

Come back to the DreamDirt Blog every Friday for a new Iowa Farmland Report!  If you are considering selling farmland you can access a myriad of free sellers resources at DreamDirt.  Get a quote to sell your land quickly.