Farmland values set records | Local News
DEWITT — As commodity prices have continued their upward trajectory over the past 18 months, land prices have followed suit.
In the east-central Iowa region, which includes Clinton and Jackson counties, values rose 10.2% from September to March, according to the recently released Annual Land Values and Trends Report. by the Iowa Chapter of the Realtor’s Land Institute.
And while farmland auctions in Clinton and Jackson counties have brought some of the highest prices per acre in years, local real estate professionals have said rising interest rates will curb slightly.
“Things are up, but if you look at the state as a whole, values are starting to stabilize a bit. Interest rates are starting to climb,” said Alan McNeil, a sales representative in the DeWitt office of Peoples Company, a national brokerage.
Doug Yegge, a broker at the desk who has more than 48 years of experience buying and selling farmland, and McNeil expect measures announced by the Federal Reserve to raise rates six times this year have some impact.
“As commodity prices move, so do land prices,” Yegge said. “But interest rates can have an impact on the future purchase price of land.”
In most local land auctions this year, bidders were a mix of farmers and investors. Statewide, the RLI reported that 65% of farmland buyers are farmers, with investors taking a 35% market share.
“There are a lot of farmer buyers who are big competitors in a lot of these auctions,” Yegge said, noting that most people typically finance around 50% of the deal.
With interest rate hikes planned by the Fed – some of which could exceed 0.25% – financial experts say rates are expected to rise 2-3% this year.
In the past six months, eastern Iowa has seen record land prices, with a 75-acre parcel of land in Jackson County going for $19,900 an acre. An October auction held by Yegge and McNeil in Clinton County fetched $17,500 per acre.
And while values were strong in east-central Iowa, the increase in property values in the state from September to September was 29.2%.
According to the latest RLI survey, high-quality cropland in east-central Iowa went from an average price of $14,091 per acre in September to $15,430 per acre in March.
The survey showed an increase in values in all nine districts of Iowa, with a 14.1% increase statewide from September to March, in addition to a 26.6% increase from September 2020 through September 2021. In September, the average price for high-quality soil in the state was $12,330 per acre, compared to $14,080 per acre in March.
Non-crop acreage showed a similar increase with a 7.9% increase in woodlot and 11.8% in pasture values.
Weather can also play a role in land values.
“Northwest Iowa is really dry, and it’s wet here. Nebraska is very dry, as is Kansas. It can also have a big impact on prices,” Yegge said.
According to Iowa State University Office of Extension and Outreach. These prices have remained as strong or stronger the first three months of this year. In fact, the spot price for corn in March was $6.58 a bushel, while soybeans were $15.
These prices bode well for land values, McNeil said. Meanwhile, he and Yegge expect the land to continue to come up for auction this year and there will be plenty of interested buyers.
“Death, divorce and taxes always happen,” McNeil said. “Everyone had a good year last year. People have money in their pockets to try their luck. There are many more buyers than a few years ago. It’s hard to predict, though. Every year is a little different. »