As last year’s upward trajectory in commodity prices continues this year, land prices are following suit.
In the East Central Iowa area, which includes Clinton and Jackson counties, values rose 10.2% from September to March, said Chuck Schwager, owner of East Iowa Real Estate in Maquoketa. Schwager is a member of the Iowa Chapter of Realtor’s Land Institute (RLI), which released its annual Land Trends and Values Survey report last month.
“This increase in East Central Iowa is in addition to a 29.2% increase reported in the year between September 2020 and September 2021,” Schwager noted.
“The results came with commodity prices being the largest factor for the increases in the land market. Government support payments, low interest rates and a low supply of land on the market were also factors that drive land values,” Schwager explained.
“These results come as no surprise, as record auction prices continue to be reported throughout many Iowa counties and throughout the Midwest,” he said.
Last December, an auction Schwager hosted brought in a Jackson County record of $19,900 an acre for farm ground. The 75-acre parcel was high quality, with a Corn Suitability Rating (CSR) of 89.5. But ground of lesser quality is also bringing in stronger prices than have been seen in years.
Cash prices for corn and soybeans finished substantially higher last year than in the previous year, with the average price of corn at $5.48 a bushel for 2021 compared with $3.48 in 2020 and soybeans at $13.13 a bushel in 2021 compared with $8.98 in 2020, according to Iowa State University’s Extension and Outreach office. Those prices remained as strong or stronger the first two months of this year.
According to the most recent RLI survey, high quality crop land in East Central Iowa increased from an average price of $14,091 an acre in September to $15,430 an acre in March.
The survey showed an increase in values in all nine Iowa districts, with a 14.1% increase statewide from September to March, on top of a 26.6% increase from September 2020 to September 2021, Schwager said. In September, the average price for high quality ground in the state was $12,330 an acre, compared with $14,080 an acre in March.
“Non-crop acres have shown a similar increase with a 7.9% increase in timberland and 11.8% for pastureland values,” Schwager said. “Non-cropland especially timber ground is in demand with smaller parcels bringing a premium.”
Sixty-five percent of farmland buyers are farmers, with investors taking a 35% market share.