Wallaces Farmer

Getting perspective on farmland values

Land Values: What can we learn from looking back at farmland values while looking ahead at what to expect for the future of Iowa farmland prices?

Doug Hensley

January 11, 2023

4 Min Read
Cornfield with silos in the distance
FARMLAND: Iowa farmland prices have been affected by many different factors through the years. Reynolds/getty images

When people think back to previous decades in agriculture, there are often themes that come to mind. For example, back in the 1970s, it was expansion and fencerow-to-fencerow agriculture. In the 1980s, we now think back on high inflation, even higher interest rates, and a very painful financial reset to American agriculture.

Moving forward and looking back in today’s rearview mirror, the 1990s now seem like a somewhat quiet recovery decade, with free markets and global trade both playing significant roles. On to the 2000s, and a turn toward a new demand source with the biofuels boom brought on by the Renewable Fuels Standard.

Through the 2010s, we now look back to see commodity demand continuing to build, a drought-inspired commodity price spike, and a prior peak in 2013 for farmland values that few thought possible — but also, a latter half of the decade that involved treading water in most corners of the ag industry. So, as we consider the 2020s thus far, what themes may have lasting legs?

For the first three years of the current decade, I would suggest low interest rates, high commodity prices and an incredible appreciation in land values, as the main themes thus far. Will these themes hold through the end of the decade and into the future? Maybe, but uber-low interest rates have already moved higher here in early 2023. We do continue to enjoy historically high commodity prices, and that reality supports farm profitability, at least in the near term. And with a generally healthy and profitable farm sector, current farmland value levels should stabilize.

The common question people are asking me is whether land values will continue to appreciate. And my answer — perhaps marginally, but I suspect the 2020 to 2022 annual asset appreciation rates of 10% to 30% are now over. Does that mean land values will weaken and subsequently back up? Not necessarily. And as the sales below indicate, there’s still plenty of dry powder when the right Iowa farm comes up for sale.

NORTHWEST
Pocahontas County. About 79 acres northeast of Rolfe recently sold at public auction for $16,400 per acre. The farm consisted of about 74 tillable acres with a CSR2 (corn suitability rating) of 85.2, and equaled $205 per CSR2 point on the tillable acres.

NORTH CENTRAL
Floyd County. About 103 acres southeast of Nora Springs recently sold at public auction for $14,800 per acre. The farm consisted of about 99 tillable acres with a CSR2 of 95.7, and equaled $161 per CSR2 point on the tillable acres.

NORTHEAST
Black Hawk County. About 60 acres east of Dunkerton recently sold for $7,666 per acre. The farm consisted of about 59 tillable acres with a CSR2 of 69.9, and equaled $111 per CSR2 point on the tillable acres. Note: About 14 acres of the tillable land were enrolled in the Conservation Reserve Program.

WEST CENTRAL
Greene County. About120 acres east of Rippey recently sold at public auction for $16,500 per acre. The farm consisted of about 117 tillable acres with a CSR2 of 87.3, and equaled $193 per CSR2 point on the tillable acres.

CENTRAL
Boone County. About 80 acres northeast of Boone recently sold at public auction for $14,000 per acre. The farm consisted of about 78 tillable acres with a CSR2 of 85.2, and equaled $168 per CSR2 point on the tillable acres.

EAST CENTRAL
Benton County. About 76 acres north of Keystone recently sold at public auction for $21,300 per acre. The farm consisted of about 77 tillable acres with a CSR2 of 94.8, and equaled $221 per CSR2 point on the tillable acres.

SOUTHWEST
Fremont County. About 303 acres northwest of Hamburg recently sold at public auction for $7,000 per acre. The farm consisted of about 283 tillable acres with a CSR2 of 73.6, and equaled $101 per CSR2 point on the tillable acres.

SOUTH CENTRAL
Ringgold County. About 156 acres southeast of Mount Ayr recently sold at public auction for $5,300 per acre. The farm consisted of about 126 tillable acres with a CSR2 of 47.0, and equaled $139 per CSR2 point on the tillable acres.

SOUTHEAST
Mahaska County. About 46 acres along the north edge of Oskaloosa recently sold via online auction for $15,800 per acre. The farm consisted of about 44 tillable acres with a CSR2 of 77.5, and equaled $213 per CSR2 point on the tillable acres.

Hertz Real Estate Services compiled this list, but not all sales were handled by Hertz. Call Hertz at 515-382-1500 or 800-593-5263 or visit hertz.ag.

About the Author(s)

Doug Hensley

president, Hertz Real Estate Services

Hensley is president of Hertz Real Estate Services. The Hertz Farm Management Co. was started in 1946, and now provides a full spectrum of services that includes professional farm management, real estate sales, auctions, acquisitions and farm appraisals.

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