How long the value of Iowa land will increase is the real question many are wondering. The recent survey done by the Iowa Chapter of Realtors Land Institute shows another increase in the past six months.

“All three categories of tillable land saw a value increase of 2.8% from March to September 2022,” says Matt Vegter, land trends and values committee co-chair. “This is following the September 2021 to March 2022 time period that showed a 14.1% increase, giving us a year-over-year increase of 16.9% for the state of Iowa.”

Breaking it down into the nine crop reporting districts shows the highest increase in the past six months in south-central Iowa, with an increase of 4.6%; and the lowest in north-central Iowa, with no change seen. However, over the past year, the highest value increase is seen in southwest Iowa, with an increase of 22.9%; and the lowest increase again seen in north-central Iowa, with a 12.3% increase.

Higher input costs and increasing interest rates are expected to slow the ramping up of land values in 2023. Vegter says it is expected to see the prices level off after the steep increase in 2022. Overall land values from September 2021 to September 2022 have seen an increase of 16.9%.

Pasture, timber acreage prices increasing now

Pasture and timber ground has seen an increase in the past six months as well. Pasture ground in northwest Iowa has the highest value at $5,000 per acre, but the largest increase was seen in south-central Iowa, with a 5.5% increase to bring average prices to $4,200 per acre. Timber acres have the highest value in east-central Iowa, with a value of $4,246 per acre, but the highest increase was seen in southwest Iowa, with a 6.1% increase to bring the value to $3,565 per acre.

Vegter says when comparing Iowa land values to other states using the Chicago Federal Reserve study, Iowa has been shown to be more aggressive on land prices in the past year, followed by Indiana and Illinois.

“The positive drivers for these prices continues to be the level of commodity prices and 2022 net farm incomes,” he says. “But with interest rates, input prices and the increased volume of farms being offered to the market, this will likely level off in the coming months.”

Vegter expects to see prices swings in farms based on the quality of land being sold in the coming months, with the value increases slowing down.