Land prices in Clinton and Jackson counties went up more than twice as much as the state average last year, fueled by rising commodity prices, low interest rates and a tight supply.
Clinton County’s average farmland value rose 3.9% to $7,758 from November 2019 to November 2020 and 4.9% to $7,056 in Jackson County during the same period, according to the 2020 Iowa State University Land Value Survey.
The state overall showed a 1.7% increase, with an average acre of farmland valued at $7,559. The numbers in the survey represent a statewide average of low-, medium-, and high-quality farmland.
“The year 2020 started out with significant uncertainties due to COVID-19, trade uncertainties and then the destruction caused by the derecho. Yet the land market in our area remained steady with strong demand and a short supply of available land on the market,” said Chuck Schwager, owner of East Iowa Real Estate in Maquoketa.
Doug Yegge and Alan McNeil agreed. From their vantage point at the DeWitt office of Peoples Company, a national brokerage, they saw a marked difference in the last quarter of the year.
“Moving into that fall season and people getting a crop out, it seemed like there was some optimism and traction in the market,” said McNeil, a sales representative with the company.
“The higher quality land especially has been affected,” said Yegge, who is a broker with the company. “There’s just been a number of farms that sold in the last few months that have been sitting on the market for quite a while. It was somewhat of a stagnant market for the first part of the year. It wasn’t real slow, but it wasn’t anything like it is now.”
The report showed land values also went up in neighboring counties, albeit at lower rates: Cedar County’s average value per acre rose 0.72% to $8,737; Dubuque County increased 0.93% to $7,678; and Jones County increased 3.7% to $7,802.
Wendong Zhang, an assistant professor in economics and extension economist at Iowa State, conducts the annual land value survey each year, based on reports by agricultural professionals knowledgeable of land market conditions, such as appraisers, farm managers, agricultural lenders, and actual land sales.
“The land market faced downward pressure initially with the onset of the COVID-19 pandemic, which lowered food demand and resulted in declines in livestock and ethanol prices,” said Zhang.
But the negative impact COVID-19, weather uncertainty and other factors initially had on land value has been mitigated by other market forces, experts said.
Prices for corn and soybeans began increasing in September and remain going the right direction.
“The rally in commodity prices, strong government payments and lower interest rates gave the land market a small boost in the last quarter of 2020. We are seeing positive attitudes in the industry and strong interest from both farmers and investors in purchasing land,” Schwager said.
As long as commodity prices head north, land values will benefit.
“If commodity prices go up, land is going to go up,” McNeil said.