12/14/04
Contacts:
Michael Duffy, Economics, (515) 294-3000, mduffy@iastate.edu
Del Marks, Continuing Education and Communication Services, (515) 294-9807,
delmarks@iastate.edu
Iowa Farmland Value Reaches Record High at $2,629 an Acre
AMES, Iowa -- The average value of an acre of farmland in Iowa increased $354 to an all-time high of $2,629 in 2004, according to an annual survey conducted by Iowa State University. Using this average increase of $354. the total value of the state's 32.6 million acres of farmland was up by about $11.5 billion over the past year.
The 2004 average value topped a previous record of $2,275 reported last year, and it represented a 15.6 percent increase over the 2003 average. Mike Duffy, ISU Extension farm economist who conducts the survey, said the effect of inflation on the value of the dollar means that the 2004 figure is roughly the same as the value of land in 1973, before the run-up in values began that led to a peak of $2,147 in 1981.
After the 1981 peak, Iowa land values dropped sharply, reaching a statewide average of $787 per acre in 1986. The 2004 figure represents an increase of 234 percent in the past 18 years.
Values increased in all 99 Iowa counties and topped $1,000 an acre in every county for the first time since ISU began conducting the survey in 1941. Twenty-seven counties had an average value of more than $3,000 per acre this year, compared with only four in that category in 2003. The average value in Scott County this year was $4,167 an acre, the first time a county has topped the $4,000 level.
The survey of real estate brokers, farm lenders, and others who work directly with the land markets, indicated the increases topped 10 percent in all nine of the state's crop reporting districts, ranging from 12.5 percent in the east central district to 17.7 percent in the southwest crop reporting district. Gains of less than 10 percent were reported in only eight counties. Fifteen counties had increases of more than 20 percent. The smallest percentage increase was 7.7 percent in Jones County, and the largest increase was 22.9 percent in Hardin County.
The average value increased for the fifth year in a row after slight declines in 1998 and 1999. The largest dollar increase was $592 per acre in Humboldt County. Other counties with an increase of more than $500 per acre (or $50,000 per 100 acres) included Plymouth, Dickinson, Calhoun, Hancock, Wright, Hamilton, Webster and Hardin.
Iowa farmland has increased in average value by about 47 percent over the past five years. Duffy said he is frequently asked whether the run-up in prices is likely to result in another crash in land values similar to the one that occurred in the mid 1980s. "That is a very difficult question to answer. The answer really is 'it depends,'" Duffy said. Some of the factors that will influence future land values include the level of government farm programs, which have helped support land prices in recent years, and federal budget, trade and monetary policy.
The cost of farm programs could make them a political target, which would have an adverse effect on land values, Duffy said, and challenges to the legality of U.S. farm subsidies by our international trading partners also could be a factor. Federal monetary policies might be a factor if interest rates begin to rise, he said.
Duffy said low interest rates were a major factor in value increases this year and were mentioned by 45 percent of those responding to the survey. Other positive factors were good crop yields in 2003, mentioned by 22 percent of the respondents; strong demand for land as a productive investment, mentioned by 19 percent; good grain prices in the recent past, mentioned by 18 percent; favorable tax treatment of land transactions, mentioned by 15 percent, and the scarcity of land on the market, mentioned by 12 percent.
Negative factors that worked to hold down prices from even larger increases this year included lower current grain prices, listed by 20 percent of the respondents, and the belief that land prices are too high to provide enough cash flow to pay for the purchase, mentioned by 12 percent.
Low grade land, which averaged $1,713 per acre in 2004, increased 17.1 percent over the previous year. Medium grade land averaged $2,457 per acre, a 15.7 percent increase, and high grade land averaged $3,193 per acre, an increase of 14.4 percent.
The highest value in an individual county was $4,167 per acre in Scott County in east central Iowa, while the lowest value in an individual county was $1,104 per acre in Decatur County in south central Iowa.
Forty-four percent of the survey respondents said the number of sales this year was about the same as last year, while 33 percent said there were more sales in 2004, and 22 percent said there were fewer sales. Existing farmers were the buyers in about 56 percent of the transactions this year, with investors accounting for about 38 percent of the sales, new farmers 2 percent, and other purchasers 4 percent.
About 1,100 copies of the survey are mailed each year to licensed real estate brokers, ag lenders, and others knowledgeable of Iowa land values. Respondents are asked to report values as of Nov. 1. Average response is 500 to 600 completed surveys, with 516 returned this year. Respondents provided 675 individual county estimates, including land values in nearby counties if they had knowledge of values in those counties.
Only the state average and the averages for the nine crop reporting districts are based directly on data collected in the survey. The county estimates are derived through a procedure that combines ISU survey results with data from the U.S. Census of Agriculture. The ISU survey is the only one of several conducted throughout the year that reports data for all 99 counties.
The survey is sponsored by the Iowa Agriculture and Home Economics Experiment Station at ISU, with results reported by ISU Extension. Duffy was assisted in the project this year by Darnell Smith, extension program specialist in economics.
Additional information on the 2004 survey is available on the ISU Extension Web site at http://www.extension.iastate.edu/emms/lvs2004/.
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Survey Results By Crop Reporting District: |
||||
|
2004 |
2003 |
2003-2004 |
|
District |
$/acre |
$/acre |
$ Change |
% Change |
Northwest |
3,118 |
2,683 |
435 |
16.2% |
North Central |
2,913 |
2,514 |
399 |
15.9% |
Northeast |
2,665 |
2,347 |
317 |
13.5% |
West Central |
2,728 |
2,329 |
399 |
17.1% |
Central |
3,101 |
2,652 |
449 |
16.9% |
East Central |
3,054 |
2,715 |
340 |
12.5% |
Southwest |
2,088 |
1,774 |
314 |
17.7% |
South Central |
1,547 |
1,354 |
193 |
14.2% |
Southeast |
2,286 |
1,979 |
306 |
15.5% |
State Average |
2,629 |
2,275 |
354 |
15.6% |
Survey Results By Crop Reporting District: |
||||
|
2004 |
2003 |
2003-2004 |
|
District |
$/acre |
$/acre |
$ Change |
% Change |
Adair |
1,766 |
1,487 |
279 |
18.8% |
Adams |
1,697 |
1,392 |
305 |
21.9% |
Allamakee |
1,789 |
1,645 |
144 |
8.7% |
Appanoose |
1,270 |
1,090 |
180 |
16.6% |
Audubon |
2,421 |
1,982 |
439 |
22.2% |
Benton |
3,015 |
2,777 |
238 |
8.6% |
Black Hawk |
3,311 |
2,967 |
344 |
11.6% |
Boone |
3,284 |
2,883 |
401 |
13.9% |
Bremer |
3,027 |
2,647 |
380 |
14.3% |
Buchanan |
2,976 |
2,556 |
419 |
16.4% |
Buena Vista |
3,223 |
2,782 |
441 |
15.8% |
Butler |
2,900 |
2,536 |
364 |
14.4% |
Calhoun |
3,302 |
2,790 |
513 |
18.4% |
Carroll |
3,054 |
2,729 |
325 |
11.9% |
Cass |
2,279 |
1,880 |
400 |
21.3% |
Cedar |
3,280 |
3,027 |
253 |
8.4% |
Cerro Gordo |
2,995 |
2,704 |
291 |
10.8% |
Cherokee |
2,890 |
2,406 |
484 |
20.1% |
Chickasaw |
2,523 |
2,300 |
223 |
9.7% |
Clarke |
1,327 |
1,116 |
211 |
18.9% |
Clay |
2,974 |
2,644 |
330 |
12.5% |
Clayton |
2,430 |
2,111 |
318 |
15.1% |
Clinton |
2,939 |
2,701 |
238 |
8.8% |
Crawford |
2,607 |
2,192 |
415 |
18.9% |
Dallas |
2,947 |
2,634 |
313 |
11.9% |
Davis |
1,461 |
1,225 |
236 |
19.3% |
Decatur |
1,104 |
936 |
167 |
17.9% |
Delaware |
3,059 |
2,576 |
483 |
18.8% |
Des Moines |
2,840 |
2,562 |
279 |
10.9% |
Dickinson |
2,771 |
2,269 |
503 |
22.2% |
Dubuque |
2,949 |
2,722 |
227 |
8.4% |
Emmet |
3,064 |
2,698 |
366 |
13.6% |
Fayette |
2,671 |
2,263 |
408 |
18.0% |
Floyd |
2,781 |
2,307 |
474 |
20.6% |
Franklin |
2,962 |
2,562 |
399 |
15.6% |
Fremont |
2,342 |
2,052 |
291 |
14.2% |
Greene |
2,909 |
2,615 |
295 |
11.3% |
Grundy |
3,493 |
3,102 |
391 |
12.6% |
Guthrie |
2,388 |
1,982 |
406 |
20.5% |
Hamilton |
3,442 |
2,881 |
561 |
19.5% |
Hancock |
2,986 |
2,441 |
545 |
22.3% |
Hardin |
3,080 |
2,507 |
573 |
22.9% |
Harrison |
2,460 |
2,096 |
364 |
17.3% |
Henry |
2,677 |
2,391 |
286 |
12.0% |
Howard |
2,190 |
1,945 |
245 |
12.6% |
Humboldt |
3,260 |
2,669 |
592 |
22.2% |
Ida |
2,935 |
2,568 |
367 |
14.3% |
Iowa |
2,370 |
2,032 |
337 |
16.6% |
Jackson |
2,427 |
2,122 |
305 |
14.4% |
Jasper |
2,687 |
2,302 |
384 |
16.7% |
Jefferson |
1,916 |
1,698 |
218 |
12.8% |
Johnson |
3,169 |
2,698 |
471 |
17.4% |
Jones |
2,883 |
2,677 |
206 |
7.7% |
Keokuk |
2,281 |
2,047 |
234 |
11.4% |
Kossuth |
3,119 |
2,686 |
432 |
16.1% |
Lee |
2,341 |
1,982 |
359 |
18.1% |
Linn |
3,275 |
2,926 |
349 |
11.9% |
Louisa |
2,579 |
2,168 |
411 |
18.9% |
Lucas |
1,358 |
1,199 |
159 |
13.2% |
Lyon |
2,938 |
2,634 |
304 |
11.5% |
Madison |
2,136 |
1,808 |
328 |
18.1% |
Mahaska |
2,362 |
1,954 |
408 |
20.9% |
Marion |
2,136 |
1,793 |
343 |
19.1% |
Marshall |
3,187 |
2,846 |
340 |
12.0% |
Mills |
2,310 |
1,907 |
404 |
21.2% |
Mitchell |
2,724 |
2,409 |
315 |
13.1% |
Monona |
2,251 |
1,914 |
336 |
17.6% |
Monroe |
1,418 |
1,200 |
219 |
18.2% |
Montgomery |
2,103 |
1,798 |
305 |
17.0% |
Muscatine |
2,976 |
2,528 |
448 |
17.7% |
O'Brien |
3,463 |
2,993 |
470 |
15.7% |
Osceola |
2,963 |
2,561 |
402 |
15.7% |
Page |
1,994 |
1,772 |
222 |
12.5% |
Palo Alto |
2,937 |
2,532 |
405 |
16.0% |
Plymouth |
3,064 |
2,564 |
501 |
19.5% |
Pocahontas |
3,210 |
2,762 |
449 |
16.2% |
Polk |
2,893 |
2,483 |
410 |
16.5% |
Pottawattamie |
2,627 |
2,242 |
384 |
17.1% |
Poweshiek |
2,518 |
2,053 |
465 |
22.7% |
Ringgold |
1,202 |
1,017 |
185 |
18.2% |
Sac |
3,112 |
2,678 |
434 |
16.2% |
Scott |
4,167 |
3,697 |
470 |
12.7% |
Shelby |
2,614 |
2,227 |
387 |
17.4% |
Sioux |
3,434 |
3,072 |
363 |
11.8% |
Story |
3,362 |
2,873 |
489 |
17.0% |
Tama |
2,760 |
2,369 |
391 |
16.5% |
Taylor |
1,629 |
1,436 |
193 |
13.5% |
Union |
1,684 |
1,497 |
187 |
12.5% |
Van Buren |
1,614 |
1,355 |
260 |
19.2% |
Wapello |
1,969 |
1,764 |
205 |
11.6% |
Warren |
2,395 |
2,124 |
270 |
12.7% |
Washington |
2,915 |
2,546 |
369 |
14.5% |
Wayne |
1,312 |
1,208 |
104 |
8.6% |
Webster |
3,394 |
2,825 |
569 |
20.1% |
Winnebago |
2,725 |
2,368 |
357 |
15.1% |
Winneshiek |
2,269 |
1,904 |
365 |
19.1% |
Woodbury |
2,395 |
2,039 |
355 |
17.4% |
Worth |
2,708 |
2,215 |
493 |
22.3% |
Wright |
3,358 |
2,804 |
553 |
19.7% |