The value of Iowa’s farmland has increased 2 percent over the past year, but the uptick may not indicate improvements to the overall farm economy.
The annual Iowa Land Values Survey found the small increase this year after three consecutive years of farmland values slipping.
“I would not rush into the conclusion that the market has fundamentally improved,” says Wendong Zhang, an Iowa State University economist who presented the survey results. “Likely we are still in a trajectory of stabilization in the next one or two years.”
Zhang says a limited supply of available farmland is the reason for the average value increase, but commodity prices and farm incomes remain low and they have a stronger pull on the farm economy.
“The fundamentals haven’t improved dramatically,” Zhang says. “Farm income likely will still stabilize, the interest rate likely will rise again. So I would interpret (these results) as the stabilization, or temporary break, for us to assess where we are.”
Zhang says isolated examples of really high prices also contributed to the overall increase. But with much of Iowa’s farmland owned outright, and most sales happening locally to existing land owners, Zhang says there just are not a lot of acres changing hands. He anticipates flat or slightly lower values for the next year or two.