Farmland values fell 3.9 percent in Iowa this year, to an average $7,633 an acre, according to an annual survey by Iowa State University. It was the second year in a row of decline in the No. 1 corn state. “Farmland values have now fallen almost 13 percent from the historically high 2013 values,” said ISU’s Center for Agricultural and Rural Development. “Farmland values hit a historic peak of $8,716 per acre in 2013, but declined 8.9 percent to $7,943 the following year. The drop in value this year is smaller than that of last year, but now marks the third time values have fallen since 2009.”
The results of the survey were similar to an October estimate by agricultural realtors of a 3.7-percent decline this year. Farmland values are expected to fall across the Farm Belt because of sharply lower crop and livestock prices and the resultant contraction of farm income. The ISU survey contacts people with knowledge of the land market, such as appraisers, farm managers and agricultural lenders as well as looking at sales data.
Iowa farmland values are still twice the level of a decade ago and 14-percent higher than in 2011, despite the recent declines. ISU economist Wendong Zhang said land values were bolstered by a number of factors. Farmers still hold a lot of cash from the 2006-13 commodity boom, expectation of an early decline in land values and a strong demand for recreational land. Zhang said he expected land values to be steady to slightly lower in the near future. “It will most likely be an orderly adjustment as opposed to a sudden bubble burst,” Zhang said in an ISU release. “Most farmers will be able to weather the storm as the market prices find a new equilibrium, but farmers and land owners who bet on the high commodity prices lasting and aggressively expanded or borrowed heavily will face significant problems in the months ahead.”