IFT photo by Jeff DeYoung
Lower corn and soybean prices brought on the first decline in farmland values in several years according to a survey of farmland Realtors.
22 hours ago • By Gene Lucht, Iowa Farmer Today(0) Comments
AMES — Iowa farmland values are going down.
Nobody knows how fast or how far, but the latest figures from the state’s ag land realtors shows a decrease of 5.4 percent in the past six months.
That figure, combined with the 1.2 percent increase of the previous six months, shows a drop of 4.2 percent over the past year.
“In some ways this comes as a relief,” says Kyle Hansen, a Realtor with Hertz Real Estate Services in Nevada. “It shows that our buyers are making logical decisions based on the commodity prices.”
The latest realtor survey, compiled by the Iowa Chapter REALTORS Land Institute, was March 27. It asked ag land realtors to estimate the average value of farmland as of March 1.
Land values in the survey fell in all parts of the state.
The largest drop came in Southeast Iowa, where prices fell 8.4 percent. The smallest percentage drop came in Southwest Iowa, where they only fell 2.1 percent.
And, the survey indicated pasture and timber land dropped less than good cropland, in part because it has been high-quality cropland that has risen the most and the fastest in recent years.
Pasture and timber values have increased in parts of Iowa.
Perhaps the most surprising figure is pasture land has gone up 9.7 percent in Southwest Iowa, and timber has jumped 28.8 percent also in that district.
Hansen cautions those values were relatively low, so it takes less of a dollar increase to trigger a high-percentage increase. But, he adds there is little doubt increased profits for cattle and for cow-calf production have boosted some pasture prices.
Hansen says the survey does not look at rental rates, but he says often rental rate trends lag about a year behind land value trends.
The realtors say there have been many good reasons why ag land values have skyrocketed in recent years, including low interest rates and the lack of other good investment options.
But, by far the biggest reason has been corn and soybean prices. Corn prices have averaged $5.22 in the past five years while soybean prices have averaged $11.96.
Both of those figures are historically high and lasted an inordinately long time.
With prices slipping in recent months land prices were sure to weaken, they say.
There is some concern both in the land market about global economic uncertainty, signified by the political unrest in Ukraine.
Prices for high-quality cropland vary from $12,930 (down from $13,534) in Northwest Iowa to $8,056 (down from $8,644) in South Central Iowa.
Prices for medium-quality land vary from $9,843 in Northwest Iowa to $6,228 in South Central Iowa.
And, low-quality land varies from an average of $6,706 in Northwest Iowa to $3,618 in South Central Iowa. Non-tillable pasture varies from $3,393 (up from $3,093) in Southwest Iowa to $2,313 ((down from $2,383) in North Central Iowa.
Timber varies from $2,518 in Northwest Iowa to $1,888 in North Central Iowa.
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