New Iowa Farmland Price Record Set by Grundy County Iowa Bidders
Written by Jason Smith
Jason Smith is an Auctioneer and Land Broker specializing in farmland marketing, 1031 exchanges and family land divisions. Jason has sold over 1000 land parcels in his career and has a dedicated team of assistants that have conducted over 9000 auctions. Jason has appeared on many state and national news publications offering commentary on farmland prices.
Email: Jason@dreamdirt.com | Phone 515-535-6633
Back in May of this year I predicted we would see a new record farmland price set this year, and I suspect it may be broken yet again this year. In my blog post about the developing land market of 2021 “Farmland Prices in 2021 May Be a Reflection of 2011” I said we were likely to see a new record farmland price this year. We did last week on a farmland auction in Grundy County, Iowa! An excellent of example of why auctions are the best method to sell unencumbered tillable farmland. Competition often creates prices the seller never would have imagined! You can find the video to the latest news story at the bottom of this blog.
The 2021 Record Farmland Price in Iowa
This time it was another 80 acre farm, just like that record price of $20,000 near Hull in Northwest Iowa for bare land in 2011 that really made Iowa farmland prices newsworthy. It was the first time we ever broke $20,000. In the case of this new record farm, it had a wind turbine with a significant additional stream of income on it making it harder to objectively compare it to past record land prices in Iowa. I don’t want to detract from the record price, it is the record and highest but at the same time, it’s worth helping people and especially future sellers, this is an anomaly. This farm was receiving an additional $22,000 annually with a 2% escalation eventually topping out at $36,000 annually and a possible 25 year extension. Thats a very obvious factor in why a buyer paid a record price for this farm. Any similar farm with similar income would do just as well. That is much more lucrative than most turbine payments. Don’t let news of this sale trick you into believing many other farms will sell that high, this is a rare situation. The average price of an acre of farmland in Iowa is still below $10,000. This farm was likely sought after for its artificially high income potential and manure dispersion as well. Issues of manure management make the purchase something different than a standard farmland purchase where the primary intention is to grow a crop. Few really understand the financial implications of manure and the problem it can present for some high capacity livestock operations. It certainly makes a real estate purchase less significant from a financial perspective when this is the case. The same can be the case when you have multiple 1031 replacement farm bidders in a crowd, you can see artificial inflation of farmland prices on an individual sale basis and that tends to happen more during times like this. Will additional sales volume tamp down demand? Certainly it will eventually but it will take a significant amount of land in a specific period to affect the current demand. Thats less likely to happen unless we see very significant new farm listings on the market this Winter.
What Will Farmland Prices in Iowa do Next?
For the time being, it will continue. The market is absolutly on fire right now. In fact we just completed a 500 acre auction in Hamilton County, IA yesterday and the interest was off the charts, like nothing we’ve seen recently. The bidding was notably more aggressive as we visited with bidders their frustration at an inability to locate land for sale was very evident. Will it hang on long term? Well, if our experiences in 2011-2013 tell us anything the answer is, no. The prices won’t burst afterward either but the absolute top of the market may already be waning slightly. This months Rural Mainstreet Index by Creighton University started to show some weakness, nearly identical to what we saw in 2012. The farmland market has strengthened for 10 months straight but showed slightly off in the 11th month. If you are selling farmland you still have time to hit the top of the market and I still suspect we’ll see yet another record price this Fall and Winter. I really expect that record to move back to NW Iowa where its been for so long. Northwest Iowa farmland volume has remained low and less active that what we’ve seen in other parts of Iowa and I expect many farms to sell in that region this year. I may even predict the record will be within 25 miles of Sanborn, IA. That strong neighborhood is the most likely to break the record again.
A Few Throwback Images of the 2011 and on Era
2011-2013 taught us alot of what this year is likely to be like in terms of market and demand. In 2011 I had the distinct pleasure and honor to work with many state and national news outlets to offer commentary on the farmland prices as selling farmland in Iowa changed forever. That year presented circumstances along with changing technology that really changed the world and how we sold farms. In the few years following DreamDirt would be the first company to every conduct a farmland auction with online bidding!
Initially I spent 2 days with a crew from NBC to film a story about farmland values and what the market was doing at the time. It was an exciting time to be a land salesman and auctioneer, things were moving so fast. For a child raised during the farm crisis, it felt good to see farms doing so well. It also felt good to help many of those that were in the prime of their life during the crisis becoming millionaires with the fall of our auction gavel!
While working with NBC was a lot of fun and their story turned out great, one of my most memorable interactions with the media came in this interiew the the New York Times. Their crew met me on a farm I had recently sold in Minburn, Iowa. The farm had sold for $10,500 per acre and at the time was newsworthy because of the price. I became friends with the reporter Brian Lehman who happend to be a Coca-Cola memorabilia collector and was amazed to meet an auctioneer in person! I was amazed to meet a New York Times reporter in person! Over the years I was able to send him lots of leads on things he was looking for to complete his collection, even at times successfully selling him items from our own auctions! You can read the story Across Corn Belt, Farmland Prices Keep Soaring
Its been a long time since I’ve worn a vented Stetson. This may have been along the last days I wore one. My career as a farmland salesman in Iowa changed after the attention of national media shined a light on our services. Our company name “DreamDirt” really connected with a lot of people that really understood the meaning behind the name without any explanation. DreamDirt was created as nod to so many things Iowa and Midwestern. Faith, dreams, farming, hard work, honesty, family and a layer of soil that we all owe our existence too. Something so amazingly wonderful, providing and life giving that supported so many families and provided everything from food to college educations. It has never been lost on me why farms are so sentimentally valuable to the heirs that are left to make the transition decisions and that’s why we have so dedicated ourselves to representing sellers of farmland and ensuring their safety. Its important to us too.
Over the past few years I’ve annually contributed to many articles and authors that tract farmland prices stories. Progressive Farmer is among my favorite. Here are a couple of my most memorable pieces with them
This week again I began receiving requests from media outlets to speak about “Records” again! It’s been a while since we’ve used that word! I’ve always enjoyed using my own knowledge and experience to help people understand what is happening, what they can expect and the best path forward for them. This is a photo that my wife Nicole snapped while I visited with the ABC Affiliate reporter this week. You can see the video from this interview just below.
You can find a link to the news story Iowa Farmland Sells for more than $22,000, Sets State Record
Heatmap of Iowa Farmland Sales
In 2021 we launched Iowa’s first ever heatmap of farmland sales of tillable farmland with 80% tillable acres or more. This has proven to be a very easy way to visualize farmland prices and drill down on regions within the state. You can see where auctions are most prevalant and the areas with the highest price per acre. You can even drill down to the sale level and examine individual sales with amounts and $ per CSR2 amounts. Click the map to explore your area.
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