Buy low, sell high is the refrain of any investment opportunity. That’s what makes current farmland markets so intriguing.

Farmland values in Iowa declined for the first time in five years, according to a Benchmark Farm Value Trends Report issued last July by Farm Credit Services of America (FCSAmerica) and Frontier Farm Credit. Iowa farmland values showed an average decline of 2.4% for both the past six and 12 months, according to the report.

“We're not surprised that the land values are softening, given higher interest rates, lower commodity prices and certainly declining margins,” says Jim Knuth, senior vice president for FCSAmerica. “A major factor that also helped land values over the last year was that sales numbers were down.”

Knuth expects land prices to follow a similar pattern that occurred about a decade ago.

“After the ethanol boom peaked out in 2012 to 2013, land values declined about 20% to 22% before they stabilized,” he says.

However, expect volatility in sale prices going forward. “We think you will see a mix of no sales, strong sales and weaker sales over the next one to three years,” he says.

So, is now the time to buy?

“The old saying is the time to buy land is when it's for sale,” Knuth says.

Lower prices could make purchases more attractive, particularly if they continue to decline. Still, make sure payments fit your operation, Knuth advises. 

“It really comes down to how much debt and risk is taken to buy land,” Knuth says. “Do you have adequate working capital to buy it? What will that do to your land costs per acre? The advice we give customers, considering today’s higher land prices and higher interest rates, is don’t bet the farm just to buy the farm.”