Farm Progress

Investor interest supports land prices

Both local and out-of-state investors are buying farmland.

January 19, 2018

3 Min Read
LAND DEMAND: Investors are providing a layer of support and stability for land values. But low crop prices continue to keep a lid on the bidding.

The farmland market across the Iowa remains stable. Value ranges exist for the same quality land in different neighborhoods and can be affected by several potential factors, including the recent volume of land sales, the influence of local livestock production and local growing-season success. The highest quality farms (highly productive soils, solid fertility, and drainage and high “farm-ability”) continue to outperform farms with poorer soils, waterways or other obstructions.

Statewide, there continues to be interest in farmland from both local and non-local investors. Some of these investors are seeking diversification for their overall investment portfolios, while others are seeking to complete 1031 tax-deferred exchanges after having sold land for commercial or residential development in more urban areas.

The investor-level interest provides an additional layer of market depth and stability. Finally, interest rates remain very low, which also creates a layer of support in the Iowa farmland market. Overall, there are many supportive factors to the current farmland marketplace.

Likewise, there are factors that seem to be pressuring farmland values. Low commodity prices and several consecutive years of weak on-farm profitability continue to keep a lid on land values. Additionally, in areas that have seen an increase in recent land sales activity, the use of available local capital to buy more land has created the potential for price weakness in that immediate area.

Pay close attention to neighborhoods where several sales are occurring, and understand that this may be a marker for potential farmland price weakness on other upcoming sales in the area. For landowners concerned about farmland values dropping in the future, now may be a logical time to consider selling.

NORTHWEST

O’Brien County: South of Archer, 73 acres recently sold at public auction for $12,800 per acre. The farm has 69 tillable acres with a CSR2 of 97.3 on primary soil types of Galva, Primghar and Afton. The property was sold subject to a one-year cash rent lease for the 2018 crop year, with the buyer to receive $400 per tillable acre for the 2018 crop year.

NORTH CENTRAL

Butler County: In Fremont Township, 78 acres sold for $8,100 per acre. The parcel consists of 76.5 crop acres with a 74.3 CSR2 rating. The sale equals $111 per CSR2 point on the crop acres.

NORTHEAST

Black Hawk County: Southeast of Hudson, 68 acres sold at public auction for $11,300 per acre. The farm is 100% tillable cropland and features a 92.1 CSR2. Buyer is a local farmer.

WEST CENTRAL

Ida County: In Douglas Township, 151 acres sold for $7,000 per acre. The parcel is 148 tillable cropland acres with a 74.4 CSR2. The sale equals $96 per CSR2 point.

CENTRAL

Grundy County: In German Township, 154 acres sold for $9,600 per acre. It has 150 tillable cropland acres with a 91.4 CSR2 and $108 per CSR2 point on the crop acres. 

EAST CENTRAL

Cedar County: South of Mechanicsville, 145 acres recently sold at public auction for $10,200 per acre. The farm consists of 139 tillable cropland acres with a 91.4 CSR2 and $116 per CSR2 point on the crop acres.

SOUTHWEST

Taylor County: Northeast of Bedford, 99 acres sold at public auction for $3,000 per acre. The farm has 76 tillable acres with a CSR2 of 54.2, of which 51 acres are in cropland and 25 acres are in CRP paying $178 per enrolled acre. This farm has 23 acres of non-cropland. 

SOUTH CENTRAL

Lucas County: East of Chariton, 81 acres sold at public auction for $3,000 per acre. The farm consists of 73 tillable cropland acres in hay with the balance in timber.

SOUTHEAST

Lee County: Near Wever, 85 acres sold for $4,076 per acre. The farm has 81 tillable cropland acres with an average CSR2 of 56.2 with sandier soil types. The sale equals $76 per CSR2 point on the crop acres. 

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

 

 

 

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