I have one word to describe the current land market in Iowa - STRONG. This contradicts everything you hear from the news media. No, the news media is not reporting “fake news”. The news media is reporting: lower commodity prices, lower farm net income & lower cash rents than in 2016. All true. What is not being reported is the ultra-low supply of farmland for sale and the amount of pent up demand to buy farmland by farmers and investors. Demand to buy farmland is still very strong in 2017.
Increase in Land for Sale
What has changed in 2017 is the amount of land for sale. I visit with a lot of realtors across the state of Iowa and have been told by several they have never seen so few farms being offered for sale. If they have, it was during the 1980’s. The ultra-low supply for sale and strong demand to buy has made for a very interesting auction market. I was amazed in Q2 how many farms sold over $9,000/acre, $11,000/acre, and even $13,000/acre.
Land Real Estate Economics
Are commodity prices and cash rents directly correlated to how much you can pay for a farm? Yes! It comes down to the law of supply and demand. Demand to buy farmland far exceeds the amount of supply available to buy. It is my opinion, this market is as strong as it has been for a couple of years.
2017 Land Real Estate Outlook
Do I think the market could go down? Yes! I have heard more than one banker say they have some over-leveraged customers and, if 2017 is not a profitable year, their clients may need to sell some land to shore up balance sheets. If the supply of farmland for sale goes up this fall/winter, I would expect land prices to come down. If you are thinking of selling land in the near term, it is my opinion, to bring that farm to the market now. Let the market work for you.
Get the Full Report
Iowa's average land auction value for Q2 2017 is $7,181 per acre, with the average auction price for 85% tillable land being $8,910 per acre. Get the full report to learn the following information:
- Quarter-over-quarter Auction Prices
- Auction Prices by Crop Reporting District
- Both Land and Highly Tillable Land Auction Results
Download the archived Iowa Farmland Values Report - Q2: 2017 here.