Land auctions exceeded 200 sales in the last quarter of 2017 compared to merely 120 in quarter 3, with especially more land that is not necessarily higher-quality tillable farmland. This bump in farmland supply has resulted in a minor dip in the land prices over the past few months especially for lower quality land, however, the prices for higher quality tillable grounds are fairly stable and represent a modest increase over average sale price of $8,625 in 2016 quarter 4.
Land Real Estate Market Outlook
This stabilization of the land market is consistent with the 2017 ISU Land Value Survey results released in December 2017, which reported a 2.0 percent increase to $7,326 per acre over the average statewide farmland value in Iowa. Limited land supply is the main factor driving this year’s increase in farmland values. Put simply, one could think of land value being net income divided by interest rates. Commodity prices and farm income are still stagnant. I would not consider this a turn of the land market. Given the rising interest rates and stagnant farm income, I would not be surprised to see a continued decline in values in the future. This, to me, seems to indicate a stabilization of the land market with possible future declines as opposed to a turnaround.
Watch the Land Auction Market
In this time of change, it is critical to watch the land auction market, especially estate sales or stressed sales from financially stressed producers. I would also encourage anyone interested in the land market check out the ISU interactive web-portal, which facilitates the visualization of land market for your county, district or state since 1941 and across data sources.
Get the Full Report
Iowa's average land auction value for Q4 2017 is $7,713 per acre, with the average auction price for 85% tillable land being $8,824 per acre.
- 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 - Q4: 2017 here.
Disclaimer: the views expressed in this commentary does not reflect the view of ISU and ISU Extension and Outreach.
Written by Dr. Wendong Zhang
Dr. Wendong Zhang is Assistant Professor of Economics and extension farm management specialist at Iowa State University. Since joining ISU in fall 2015, Dr. Zhang has been the lead researcher of the annual ISU Land Value Survey, the forthcoming 2017 Iowa Farmland Ownership and Tenure Survey, as well as the ISU 91st Soil Management Land Valuation Conference in Ames on May 16.