Floyd and neighbor counties saw farmland values increase in past year
By Bob Steenson, email@example.com
Floyd County farmland value increased in 2023 by the fastest pace among neighboring counties, but it isn’t the most valuable land in the area.
Floyd County tied with Mitchell County in seeing the average price of farmland increase by 4.7% from 2022 to 2023, from an average of $11,394 per acre to $11,929 an acre. Floyd County’s latest average value is slightly above the average farmland price for the state, which is $11,835.
The information is from the annual Iowa State University Iowa Land Value Survey, which was released recently. The survey is based on reports by agricultural professionals knowledgeable about land market conditions such as appraisers, farm managers, agricultural lenders and through actual sales prices.
Bremer County had the highest average farmland value among the eight counties surrounding Floyd County, at $13,617 an acre. In fact, Floyd County was the third lowest among the block of nine counties. All but Worth and Howard counties had higher average values.
None of the area county average farmland values came close to the highest levels in the state, in either the gain from the previous year or in the highest price.
Sioux County reported the highest average value, at $16,521 per acre. Marion County reported the largest dollar increase, $1,117 per acre, while Appanoose, Wayne, Decatur, and Lucas Counties showed the largest percentage increase, at 12.9%.
Decatur County again reported the lowest value per acre in the state, $6,286 per acre. Scott County showed the largest dollar decrease, $630 per acre, and the largest percentage decrease, -3.9% per acre on average.
Overall, Iowa’s farmland values rose again, although at a slower pace than the last two years.
The annual survey found that Iowa’s new $11,835 average value per acre was an increase of 3.7% or $424 per acre.
The modest increase this year follows a 17% increase in 2022 and a near-record 29% increase in 2021. The nominal value of an acre of farmland is again higher this year than at any point since Iowa State began surveying values in 1941. When adjusting for inflation, the 2023 average value surpasses 2022’s inflation-adjusted values by 0.5%.
Rabail Chandio, an assistant professor and Extension economist at Iowa State, said many of the factors behind the large surge in values last year supported the increase this year as well.
“Interest rates were lower through the first half of the year, commodity prices were still elevated, crop yields were a positive surprise despite the weather challenges throughout the growing season,” she said.
“Cash and credit availability remained ample and allowed farmers to stay aggressive in the land market, and investor demand grew stronger nudged by inflation concerns and lack of alternative investment options,” she said.
The Federal Reserve has used interest rate hikes to help curb inflation rates that ballooned from mid-2021 through 2022; however, Chandio said that the pace of those hikes has been tempered.
Last week, the Federal Reserve left rates unchanged in January, but noted that it won’t be appropriate to cut rates until it has gained “greater confidence” that inflation is approaching its 2% goal.
“The goal is to control inflation without triggering a recession, a strategy that has proven successful in 2023, and we hope to see maintained stability through 2024,” said Chandio, who manages the ISU survey.
“It takes a couple of years for interest rates to be reflected in farmland values,” Chandio said. “The impact of the aggressive interest rate hikes of 2022 is expected to be felt more strongly in 2024 and beyond, resulting in much more modest growth or even decreases in land values in the coming years.”
Commodity prices were a commonly cited positive influence on this year’s farmland values. Chandio said they were elevated earlier in the year due to weather and geopolitical uncertainties, but they have decreased as of the end of the year.
However, she said, “In terms of their influence on land values, they had a more positive impact on the land markets this year than a negative one.”
After three years of increases, Chandio says that the state is currently at a plateau in farmland values.
“While positive influences were more prominent at the beginning of the year, negative pressures are building as we approach 2024. Barring any unusual activity in the land markets, we may see the curve start to decline in the next year or so,” she said.
Chandio’s prediction tracks with the survey respondents’ near-term expectations – 49% expect a decline in farmland values in one year, and only 30% expect an increase. Respondents were more optimistic about values five years out – a full 70% of respondents expect values to be higher in five years.
Statewide, low-quality land now averages $7,664 per acre, an increase of 4% or $296 per acre. Medium-quality land now averages $11,075 per acre, an increase of 3.8% or $401 per acre. High-quality land now averages $14,296 per acre, an increase of 3.5% or $479 per acre.
Despite an overall loss of value, the Northwest district reported the highest values for low-, medium- and high-quality land at $9,497, $13,731 and $16,938 per acre, respectively.
Despite the overall 9.6% increase, the South Central district reported the lowest values for low-, medium- and high-quality land at $5,105, $7,498 and $9,718 per acre, respectively.
Iowa State’s Land Value Survey is conducted in November by the Center for Agricultural and Rural Development at Iowa State and ISU Extension and Outreach. Results from the survey are consistent with results by the Federal Reserve Bank of Chicago, the REALTORS Land Institute and the U.S. Department of Agriculture.