The Guthrian, IA
12-27-07
ANNUAL FARMLAND SURVEY
The value of farmland in Guthrie County took one of its biggest annual jumps
ever, 24 percent in 2007, setting a new price record.
The average price per acre swelled by $711 going from $2,963 in 2006 to $3,675
in 2007.
That marked the fifth straight year of double digit percentage increases and came
on the heels of a 12.1 percent bump in 2006, a 10.7 percent advance in 2005, a
20.5 percent gain in 2004 and a 13.8 percent hike in 2003.
Since 2002, farmland in the county has more than doubled in value increasing by
an unprecedented 111 percent.
For 22 years, until 2003, the highest recorded value of farmland in Guthrie
County was $1,763 in 1981. Five years later, in 1986, farmland in the county
bottomed out at $671 an acre.
The average value of an acre of farmland in Iowa reached an all-time high of
$3,908 in 2007, an average increase of $704 or 22.0 percent from the prior year,
according to the annual land survey conducted by Iowa State University.
Mike Duffy, ISU Extension farm economist who conducts the survey, said the
22 percent increase recorded this year is the greatest one-year increase since
1976, and marks a new record for the fifth year in a row. Since 2000, Iowa land
values have increased an average of $2,051 per acre, more than a 100 percent
increase over the 2000 average value of $1,857.
The increases were reported statewide, with the survey recording averages
above $5,000 an acre in four counties and between $4,000 and $5,000 an acre
in 51 counties. Nineteen counties reported increases of more than 25 percent,
and 59 counties had increases between 20 and 25 percent.
Duffy noted that some of the smaller percentage increases occurred in the
counties and crop reporting districts along Iowa's eastern and western borders.
He said this reflects the impact of local demand for corn from ethanol plants.
Counties along the border rivers previously received the best prices for crops due
to low transportation costs to gulf port markets, but now those crops are being
used locally by the ethanol plants, which is driving up prices in interior counties.
Duffy said he frequently is asked whether the land market will crash, and how
high it might go before it tops out. He also is questioned about the impact of the
weakening dollar, the new farm bill and the current subprime mortgage crisis.
"My general feeling is that the land market will remain strong for at least the next
five years," he responds. "We have seen a fundamental shift in demand for corn
due to ethanol production. I don't think this demand will diminish in the near
future," he said.
"The world of agriculture as we know it has changed," Duffy said. "Where these
changes will settle out and when is not known."
Of the nine crop reporting districts in the state, northwest Iowa reported the
highest average value at $4,699 per acre. The lowest average was in south
central Iowa at $2,325 per acre. Northeast Iowa was the leader in percentage
increase at 27.2 percent, while east central Iowa had the lowest percentage
increase at 14.7 percent.
Scott County (Davenport) set a state record with an average value of $5,699 per
acre.
Decatur County had the lowest average land value, $1,828 per acre. Sioux
County led the state with the largest dollar increase, $1,142.
The survey of real estate brokers, farm lenders and others who work directly with
the land markets, showed values in the West Central district grew by 18.3
percent or $623 to $4,033 per acre.
Duffy said good grain prices were a major factor in value increases this year and
were mentioned by 35 percent of those responding to the survey. Another 10
percent listed low interest rates as a major factor.
Negative factors impacting land values were high costs for the inputs needed to
grow crops mentioned by 25 percent of the respondents, high prices in general,
mentioned by 12 percent, and a concern over how long the market would remain
at high levels, mentioned by 11 percent.
Low grade land, which averaged $2,655 per acre in 2007, increased 21.0 percent
over the previous year. Medium grade land averaged $3,666 per acre, a 21.8
percent increase, and high grade land averaged $4,686 per acre, an increase of
22.2 percent.
Thirty-seven percent of the survey respondents reported more land sales in 2007
than in the previous year. That was the highest percentage since 1988. Buyers
were existing farmers in 60 percent of the sales, and investors in 34 percent of
the sales, essentially unchanged from the previous year, but down considerably
from a decade ago when existing farmers represented nearly 75 percent of the
buyers.
Values as of November 1, 2007:
2006
2007
+or%chg
Adair
2198
22742
$544
24.7%
Audubon
3311
3991
680
20.5%
Carroll
3581
4434
854
23.8%
Cass
2950
3598
648
22.0%
Dallas
3385
4327
942
27.8%
Greene
3470
4235
765
22.0%
Guthrie
2963
3675
711
24.0%
Madison
2644
3316
672
25.4%
WC Iowa
3410
4033
623
18.3%
State
3204
3908
704
22.0%