2011 IOWA LAND VALUE SURVEY: OVERVIEW
1.0
2.0
History and Purpose of the Land Value Survey.
1.1
The survey was initiated in 1941 and is sponsored annually by the Iowa Agriculture
and Home Economics Experiment Station, Iowa State University. Only the state
average and the district averages are based directly on the ISU survey data. The
county estimates are derived using a procedure that combines the ISU survey results
with data from the U.S. Census of Agriculture. The survey was conducted by
Michael Duffy.
1.2
The survey is intended to provide information on general land value trends,
geographical land price relationships and factors influencing the Iowa land market.
The survey is not intended to provide an estimate for any particular piece of property.
1.3
The survey is based on reports by licensed real estate brokers and selected individuals
considered to be knowledgeable of land market conditions. Respondents were asked
to report on more than one county if they were knowledgeable about the land
markets. The 2011 survey is based on 487 usable responses providing 642 county
land values estimates. This was a 38 percent response rate. Over three-fourths of the
respondents (77 percent) responded in 2010.
1.4
Participants in the survey are asked to estimate the value of high, medium and low
grade land in their county. Comparative sales and other factors are taken into
account by the respondents in making these value estimates.
Analysis by State.
2.1
The 2011 state average for all grades of land was estimated to be $6,708 per acre.
2.2
The increase in the state value was $1,644 per acre from 2010.
2.3
The percentage increase was 32.5 percent from 2010.
December 2011
_______________________
Prepared by Michael D. Duffy, agricultural extension economist, and Darrin Rahn and Lindsay Calvert, student research
assistants, Iowa State University, December 14, 2011.
.
3.0
4.0
5.0
6.0
Analysis by Crop Reporting District.
3.1
The highest land values were reported for Northwest Iowa, $8,338 per acre.
3.2
The lowest land values were estimated for South Central Iowa, $3,407 per acre.
3.3
The highest percentage increase was in Southwest Iowa, 36.5 percent.
3.4
The smallest percentage increase was in South Central Iowa, 26.7 percent.
Analysis by Counties.
4.1
The highest value was estimated for O’Brien County, $9,513 per acre.
4.2
The lowest value was in Decatur County, $2,721 per acre.
4.3
The greatest dollar increase was $2,524 in Scott County. Scott County also had the
highest percentage increase, 37.7 percent.
4.4
The lowest dollar increase was in Decatur County, $636. The lowest percentage
increase was 28.2 percent in Washington County.
Analysis by Quality of Land.
5.1
Low grade land in the state averaged $4,257 per acre and showed a 26.8 percent
increase or $900 per acre.
5.2
Medium grade land averaged $6,256 per acre and showed a 31.5 percent increase
or $1,498 per acre.
5.3
High grade land averaged $8,198 per acre and showed an increase of 34.2 percent
or $2,090 per acre.
Major Factors Influencing the Real Estate Market.
Ninety percent of the survey respondents listed positive and/or negative factors influencing
the land market. Of these respondents almost 100 percent listed at least one positive factor
and only 65 percent listed at least one negative factor. The respondents listed multiple
factors in most cases.
6.1
There were 6 positive factors listed by over 10 percent of the respondents. High
commodity prices were the most frequently mentioned positive factor, being
mentioned by 86 percent of the respondents. The second most frequently mentioned
factor was low interest rates, mentioned by 62 percent of the respondents. Land is a
good investment; especially relative to other investments was mentioned by 14
percent of the respondents. A similar percentage of the respondents, 14 percent,
mentioned favorable yields as a positive factor effecting land values. An overall
favorable agricultural economy was mentioned by 13 percent of the respondents, and
the final frequently mentioned factor was the availability of either borrowed or equity
capital, listed by 11 percent of the respondents.
6.2
7.0
There were 7 negative factors listed by more than 10 percent of the respondents. The
most frequently mentioned negative factor on land values was that values were too
high. This was expressed in many ways but in general the concern was that land
might be on a speculative bubble. This was mentioned by 31 percent of the
respondents who listed negative factors. The next two factors have been
identified as negative factors for a number of years. The high input costs and poor
world economy were listed by 25 and 24 percent of the respondents, respectively.
The increasing risk and/or volatility of returns to agriculture were listed by 19 percent
of the respondents who listed negative factors in the land market. Poor weather was
listed by 13 percent of the respondents and concern over the US economy was listed
by 12 percent of the respondents. Finally the limited supply of land was a negative
factor listed by 11 percent of the people who listed negative factors affecting the land
market.
Number of Sales Compared to Previous Year.
When asked to compare the number of sales in 2011 relative to 2010, 42 percent reported
either more sales or the same number of sales and 16 percent reported less sales.
8.0
Land Sales by Buyer Category.
The 2011 survey asked respondents what percent of the land was sold to four categories of
buyers: existing farmers, investors, new farmers, or other.
9.0
8.1
The majority of farmland sales, 74 percent, were to existing farmers. Investors
represented 22 percent of the sales. New farmers represented 3 percent of the sales,
and other purchasers were 1 percent of sales.
8.2
Sales to existing farmers by Crop Reporting Districts ranged from 83 percent in West
Central to 63 percent in South Central.
8.3
Sales to investors were highest in South and North Central (30 percent). West
Central reported the lowest investor activity (13 percent).
Interpretation of the Survey Results.
The 2011 land value survey covers one of the most remarkable years in Iowa land value
history. The percentage increase reported for 2011 was the highest ever recorded by the
Iowa State University land value survey. The previous high was 31.7 percent increase
recorded in 1973. In addition, the 2011 survey value, when adjusted for inflation, is at an
all-time high. The previous inflation adjusted high was in 1979.
The Iowa State University survey results match with other surveys of Iowa farmland. The
Chicago Federal Reserve Bank estimated a 31 percent increase in Iowa land values from
October 2010 to October 2011. This estimate was based on a survey of lenders in Iowa.
The Iowa Chapter of the Realtors Land Institute estimated a 12.9 percent increase in Iowa
land values for the 6 months from March to September, 2011. When comparing surveys it
is important to remember different survey populations and in times like these, it is
especially important to note the time period being presented. The 32.5 increase reported
here would represent a 2.7 percent increase per month.
The rate of increase experienced in 2011 has led to concerns that farmland may be the next
speculative bubble and that farmers are setting themselves up for a fall similar to the 1980s.
Throughout the past year there have been a number of different conferences, papers and
speeches warning of the dangers from a speculative bubble.
Examining some of the causes for the current increase in farmland values and the reactions
is helpful in assessing the situation. Farmland values are highly correlated with gross farm
income. As gross farm income increases so will land values. In 2005, corn prices averaged
$1.94 per bushel in Iowa. The preliminary estimated price for November 2011 is $6.05.
Soybean prices changed from $5.54 to $11.40 over the same time period.
There has been considerable variation in commodity prices over the past few years, but net
farm income has increased substantially and is projected to increase even more for 2011.
This increase in income has been the primary cause for the increase in farmland values.
There are other causes for the increase as well. Interest rates are at the lowest level in
recent memory. The average farm real estate loan interest rate reported in the Chicago
Federal Reserve Bank survey was 5.36 percent; the lowest since this series began in 1974.
During the early part of the 2000s there was an increase in the amount of farmland being
purchased by investors. Some of these purchases were motivated by the use of 1031 tax
exchanges. As the urban real estate market was showing significant increases in values,
many investors were taking out their money and moving it into farmland. The amount of
land purchased by what were classified as investors increased from 18 percent in 1989 to 39
percent of the purchases in 2005. But, since that time the investors, as a percentage of total
purchasers has decreased to 22 percent.
Another factor in the farmland market has been the relatively dismal performance of the
stock market. Many people are looking to buy farmland, or they are not selling farmland,
simply because they do not know where else to put their money.
The increase in farm income, the changes in investor demand and the changes in
investment alternatives have all led to a volatile market. One area where the volatility is
revealed is in the number of sales. The ISU survey respondents have shown considerable
variation over the past few years when queried about the number of sales. Sales decreased
considerably in 2009. They improved somewhat in 2010 and based on the results reported
here, most people are seeing more sales or at least similar sales in 2011 relative to 2010.
One of the differences is in the use of auctions. Auctions have always been a method for
selling farmland. But, in 2011, there appears to have been a rapid increase in the use of this
method of sale. Many of the survey respondents noted this in their responses to the survey.
One of the big reasons for the increase is because of the uncertainty of the market. When
the markets are changing so rapidly it is hard to know where the market prices should be.
Using an auction allows more bidding. Preliminary analysis of 2011 sales data shows an
increase in price by using an auction. This is not always the case, but in uncertain times no
one really knows the market. As one person said, economics may get the person to the
auction but emotion often leads to the purchase.
The Iowa State survey does not directly address the question of a speculative bubble in the
land market. But, it does offer some insights and possible answers to the question. As
noted, the gross income to land has increased substantially over the past few years.
Analysis has shown land values are more correlated with gross income than net farm
income.
Farmers are the primary purchasers of farmland. The survey reports 74 percent of the sales
were to existing farmers. Existing farmers purchase land for different reasons than
someone who views the land strictly as an investment. Farmers buy land to own it. The
land becomes a part of their retirement plan and their legacy. As such, whether or not the
values increase or decrease will not prompt the farmer to sell. The most important factor is
the level of debt they have against the land. If income falls and the farmer can no longer
service their debt they may be forced to sell.
Currently we are not seeing a substantial increase in the amount of debt being used to
finance land purchases. The USDA forecasts national farm real estate debt will increase 2
percent in 2011 relative to 2010. Since 2007, the USDA estimates show a 17 percent
increase in real estate debt. Real estate debt as a portion of total debt or in relation to the
value of total assets has remained essentially unchanged since 2007.
Although debt does not appear to have increased substantially, it is still something to be
monitored. The longer the situation of increasing land values continues the greater the
potential for poorer quality loans or too much debt.
For many years the US farm programs provided support for farm income. However, the
U.S. energy policies are now having a significant impact on farm income. Space doesn’t
permit a detailed discussion of all the ramifications of the energy policies but suffice it to
say that the policies have substantially increased the prices for both corn and soybeans. The
policies have also put us in the unusual situation where what happens to the price of oil can
have a significant impact on the price of corn.
Land values should remain strong for the next several months at least. Beyond that there is
a fair degree of uncertainty with respect to whether land values can maintain their current
levels. There are several key components to watch. One is the amount of debt incurred
with land acquisition. A second area to watch is government policies, especially policies
related to energy. A third area is what happens to input costs. Land is the residual claimant
to any excess profits in agriculture. As such, if there is money to be made after increases in
other costs, land values will increase. The performance of the overall economy, especially
with respect to income will be an important factor. Government monetary policies as they
relate to inflation and interest rates will also be important factors to watch. The
performance of the US economy and economies throughout the world will impact
commodity prices which impact land values. Finally, weather related problems both here
and in the world will have an influence on land values.
. and justice for all
The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national origin, gender, religion, age,
disability, political beliefs, sexual orientation, and marital or family status. (Not all prohibited bases apply to all programs.) Many materials can be made available in
alternative formats for ADA clients. To file a complaint of discrimination, write USDA, Office of Civil Rights, Room 326-W, Whitten Building, 14th and Independence
Avenue, SW, Washington, DC 20250-9410 or call 202-720-5964.
Issued in furtherance of Cooperative Extension work, Acts of May 8 and July 30, 1914, in cooperation with the U.S. Department of Agriculture. Cathann A. Kress,
director, Cooperative Extension Service, Iowa State University of Science and Technology, Ames, Iowa.
Table 1. Recent Changes in Iowa Farmland Values
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Value
Per Acre
419
430
482
635
834
1095
1368
1450
1646
1958
2066
2147
1801
1691
1357
948
787
875
1054
1139
1214
1219
1249
1275
1356
1455
1682
1837
1801
1781
1857
1926
2083
2275
2629
2914
3204
3908
4468
4371
5064
6708
Dollar
Change
0
11
52
154
199
261
273
82
196
312
108
82
-346
-110
-334
-409
-161
88
179
85
75
5
30
26
81
99
227
155
-36
-20
76
69
157
192
354
285
290
704
560
-97
693
1644
Percentage
Change
0.0
2.6
12.0
31.9
31.3
31.3
24.9
6.0
13.5
19.0
5.5
3.9
-16.1
- 6.1
-19.8
-30.2
-17.0
11.2
20.4
8.1
6.6
.4
2.5
2.1
6.4
7.3
15.6
9.2
-1.9
-1.1
4.3
3.7
8.2
9.2
15.1
10.8
10.0
22.0
14.3
-2.2
15.9
32.5
Table 2. Average Value Per Acre of Iowa Farmland Listed by Crop Reporting Districts and Grades of Land
_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Year
State
Average
Northwest
North
Central
Northeast
West
Central
Central
East
Central
Southwest
South
Central
Southeast
_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
All Grades
1986
1987
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
787
875
1781
1857
1926
2083
2275
2629
2914
3204
3908
4468
4371
5064
6708
937
1084
2059
2198
2240
2434
2683
3118
3393
3783
4699
5395
5364
6356
8338
912
1055
2073
2169
2240
2367
2514
2913
3222
3478
4356
4950
4827
5746
7356
786
835
1807
1868
1950
2149
2347
2665
2963
3187
4055
4590
4464
5022
6602
1986
1987
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
1048
1150
2249
2324
2407
2576
2790
3193
3511
3835
4686
5381
5321
6109
8198
1131
1306
2401
2547
2588
2776
3040
3537
3813
4261
5313
6150
6129
7283
9649
1094
1260
2362
2462
2546
2676
2817
3265
3588
3834
4807
5514
5371
6397
8601
1048
1102
2275
2329
2439
2625
2857
3189
3522
3816
4859
5415
5349
6076
7994
1986
1987
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
699
780
1629
1701
1768
1924
2123
2457
2736
3011
3667
4195
4076
4758
6256
830
957
1876
2001
2057
2278
2507
2930
3199
3561
4385
5023
4977
5883
7708
777
903
1869
1972
2040
2142
2309
2669
2982
3223
4026
4568
4450
5300
6713
709
754
1665
1728
1800
2010
2221
2515
2834
2987
3777
4339
4193
4664
6290
1986
1987
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
377
432
1045
1117
1170
1322
1463
1713
1961
2195
2656
2967
2884
3357
4257
488
571
1216
1370
1388
1571
1808
2087
2382
2566
3210
3580
3490
4161
5196
468
553
1314
1387
1423
1568
1682
1976
2252
2500
3125
3408
3281
3976
4900
405
444
1110
1167
1208
1448
1512
1816
2032
2248
2853
3296
3177
3517
4352
768
871
1837
1924
1969
2101
2329
2728
3048
3410
4033
4823
4652
5466
7419
930
1044
2128
2195
2246
2392
2652
3101
3415
3716
4529
5280
5026
5901
7781
1000
1053
2118
2190
2324
2547
2715
3054
3396
3725
4272
4743
4796
5447
7110
607
676
1346
1412
1511
1632
1774
2088
2350
2580
3209
3626
3559
4325
5905
403
421
981
992
1039
1211
1354
1547
1793
1927
2325
2573
2537
2690
3407
705
782
1570
1655
1705
1808
1979
2286
2483
2849
3463
3913
3832
4296
5705
1154
1288
2589
2660
2685
2848
3121
3621
3935
4263
5261
6076
5939
7026
9332
1343
1399
2685
2743
2907
3105
3263
3659
4069
4443
5073
5674
5738
6152
8675
832
912
1773
1825
1947
2117
2285
2657
2925
3209
3989
4642
4539
5335
7418
682
688
1499
1509
1582
1931
2121
2358
2659
2663
3231
3586
3710
3892
5109
1120
1229
2271
2353
2447
2539
2783
3174
3385
3793
4625
5346
5306
5862
7721
813
928
1898
1956
2013
2175
2438
2858
3165
3458
4194
4919
4615
5386
7029
866
925
1945
1996
2125
2358
2543
2863
3172
3501
4005
4405
4465
5445
6510
561
630
1241
1320
1410
1522
1659
1956
2217
2442
3047
3425
3386
4140
5553
396
413
949
955
1004
1152
1307
1492
1725
1866
2296
2527
2443
2596
3353
622
696
1433
1511
1571
1659
1834
2118
2347
2679
3270
3721
3535
4053
5468
475
535
1296
1299
1416
1516
1707
2028
2353
2615
3004
3469
3203
3724
4848
460
495
1188
1288
1404
1628
1811
1998
2237
2505
2928
3214
3240
3840
4671
290
341
798
862
918
996
1130
1354
1614
1729
2175
2298
2286
2868
3824
176
207
582
597
623
760
858
1029
1252
1373
1583
1757
1685
1794
1984
257
289
790
875
871
997
1063
1272
1438
1786
2131
2271
2281
2620
3335
High Grade
1000
1125
2288
2375
2437
2583
2820
3264
3691
4072
4804
5752
5552
6585
8889
Medium Grade
684
776
1692
1772
1807
1930
2167
2564
2833
3213
3796
4537
4371
5111
6981
Low Grade
350
419
1040
1126
1202
1332
1500
1746
1970
2293
2738
3187
3134
3542
4766
Level of Sales Activity, 2011
________________________________________________________
More
Same
Less
________________________________________________________
Percent
Northwest
49
43
8
North Central
59
30
11
Northeast
44
47
9
West Central
37
47
15
Central
57
30
13
East Central
29
40
31
Southwest
16
53
30
South Central
33
36
31
Southeast
36
59
5
STATE
42
42
16
________________________________________________________
Iowa Land Purchases, 2011
______________________________________________________________________
Existing
New
Farmers
Investors
Farmers
Others
____________________________________________________________________________
Percent
Northwest
79
16
3
2
North Central
68
30
1
1
Northeast
76
19
3
2
West Central
83
13
3
1
Central
72
24
2
1
East Central
71
26
2
0
Southwest
73
24
2
1
South Central
63
30
5
3
Southeast
78
17
3
2
STATE
74
22
3
1
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