Cropland values rose an average of 0.8% overall in Iowa over the past six months, according to the latest survey by the Iowa Chapter of the Realtors Land Institute. Despite this slight increase in the statewide average for the recent period, values are still down from this time a year ago.

Combining the 0.8% increase in September 2019 with the 1% decrease reported in March, the results show a 0.2% decrease in the state average from September 2018 to September 2019.

Released Sept. 19, the latest results of the twice-yearly survey of farm real estate professionals show area-to-area variability. Looking at Iowa’s nine crop reporting districts, the north-central and east-central districts saw the largest increase in value, both rising 1.8% over the past six months. Northwest Iowa saw the largest decrease, with values falling 1.2% since March 2019.

Over the past 12 months, southeast Iowa saw the biggest gains with a 4.4% increase in land value, while south-central and northeast districts were each down 1.9%. Only three crop reporting districts (west-central, east-central and southeast) had overall increases the past 12 months. Southeast Iowa’s big gain in cropland value comes as that area is raising a better crop after a couple years of weather problems. West-central Iowa increased 1.4% and east-central 0.5% for the 12-month period.

Land values hold steady

“Generally, we continue to see land values holding steady in Iowa,” says Kyle Hansen, a real estate agent with Hertz Farm Management at Nevada in central Iowa. “It’s really kind of a sideways trend currently. We’ve been in this trend for the past 18 to 24 months.” Hansen coordinates the survey with help from colleagues.

The September survey by Iowa Chapter of Realtors Land Institute shows a 0.8% increase in average value of an acre of tillable cropland during the past six months in Iowa. Values for high-, medium- and low-quality cropland are classified by potential for corn production.

Realtors participating in the survey are asked to list what they see as factors having a positive effect on land values, and those that are negative. Major factors supporting current farmland values continue to include a limited amount of land being offered for sale, government compensation payments (Market Facilitation Program) and low interest rates.

Negative factors include uncertainty with exports and foreign trade policy, decreasing levels of working capital, variability in yields for 2019 crop year and variable weather patterns.

While this land value survey doesn’t specifically ask participants for opinions on cash rent trends, Hansen says based on conversations with other real estate agents and farm managers, he believes cash rents are also relatively steady. However, he adds, there are more situations this year where lenders are advising farmers to talk to their landlords to get cash rent adjusted downward to make the cash flow work to qualify for loans for 2020 crop production.

Limited land for sale

Helping to support land values is the limited amount of land on the market, Hansen says. “We continue to see competition for the high-quality ground. Most of the land being offered for sale is from estates that have decided to sell. A lot of them are telling us they see the stabilization in current land values, and they’ve decided now is the right time to sell.

“Some sellers also comment that with the tariff and trade wars ongoing and the uncertainty that situation suggests for farm income, they feel there may be more negative pressure downward on land prices in the future.”

Farmers recently began receiving the first-round of 2019 MFP payments from USDA, which helps support land values overall. “Those payments are helping stabilize current land values,” Hansen says. “There was a lot of negative attitude in the land market prior to this new round of payments.”

Total MFP payment rates for the 2019 crop will potentially be made in three portions, says USDA, depending on the status of Chinese tariffs placed on U.S. ag products. The first part of the 2019 MFP payment is expected to be the largest, at 50% of a farm’s total payment, and it went to farmers in late August and in September.

If U.S. trade and tariff negotiations don’t progress and conditions warrant more MFP payments, the second and third payments at 25% each are planned for November and January, respectively.

Having strong buyers and good yields are important characteristics of the areas in Iowa that have higher land values. “High-quality land is still attracting the most bidders,” Hansen says. “We continue to see strength in that category. Medium- to low-quality land value trends are steady to soft in most of the state.”

In addition to cropland, this survey reports the average value of non-tillable pasture. The average for Iowa is $2,831 per acre for pasture as of September. The average value of timberland is $2,509 an acre. For more information and survey results, visit rliiowachapter.com.