County farmland values increase 12.9%
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The 2023 Iowa State University Land Value Survey reported a 3.7% increase to $11,835 per acre for average Iowa farmland values from November 2022 to November 2023. This continues the increase in land values from last year, and the $11,835/acre nominal land value is the highest ever since data collection began in the 1940s.
However, the pace of the increase has slowed down. The inflation-adjusted value, $9,131/acre in 2015 dollars, also the highest recorded, saw a very modest increase of 0.5%.
While the overall increase is supported by limited land supply, stronger-than-expected crop yields, and ample cash reserves on the farm, the slowing pace and, in some places, the fall in land values is largely attributable to the recent hikes in interest rates, decreasing commodity prices and increasing input costs.
All crop reporting districts except the Northwest district reported an increase in land values.
The Southeast and South Central districts reported the largest growths of 12.8% and 9.6%, respectively, with all other increases falling below 5%. The Northwest district reported a small decrease of 0.8% in land values. High-quality land saw a 3.5% increase, while medium- and low-quality land increased 3.8% and 4.0%, respectively.
In general, the 2023 Iowa State University Land Value Survey results echo other surveys, which all showed relatively stable farmland market values. The highest average land values were reported in Northwest Iowa, $14,753 per acre. The lowest average land values were reported in South Central Iowa, $7,482 per acre.
Land values increased across all crop reporting districts except Northwest Iowa, with a decrease of 0.8%.
The largest percentage increases were in the Southeast and South Central districts, at 12.8% and 9.6%, respectively. The East Central and Southwest districts, which saw the smallest percentage changes, reported increases of 0.7% and 2.6%, respectively. The highest value was estimated for Sioux County, $16,521 per acre. The lowest value was in Decatur County, $6,286 per acre.
Twelve of the 99 counties reported decreases in nominal land values and 45 counties reported a decrease in inflation-adjusted values, but 87 counties still report the highest nominal land values since 1950, and, for 42 counties, the inflation-adjusted values are also record-high—topping the previous peak in 2013.
The largest percentage decrease, 3.9%, was reported in Scott County, while the largest increase, 12.9%, was reported in Appanoose, Decatur, Lucas, and Wayne counties.
Sioux County reported the lowest percentage increase at less than 1%. The largest dollar decrease was reported in Scott County, $630 per acre, while Marion County saw the largest dollar increase, $1,117 per acre. The smallest dollar increase was reported in Sioux County, $5 per acre.
Most survey respondents listed positive and/or negative factors influencing the land market.
Of all respondents, 90% listed at least one positive factor, and 86% listed at least one negative factor.
In most cases, respondents listed multiple factors. There were three positive factors listed by over 50% of respondents who provided at least one positive factor. The most frequently mentioned factor was limited land supply, mentioned by 15.5% of respondents.
Strong yields and the combination of cash on hand and credit availability were the next most-frequently mentioned positive factors, mentioned by 12.6% and 12.1% respondents, respectively. Other frequently mentioned positive factors included higher commodity prices (11.3%) strong land demand including from investors (11.3%), a good farm economy (5.4%), and a recent history of favorable interest rates (2.8%).
There were also three negative factors listed by more than 40% of respondents who identified at least one negative factor. The most frequently mentioned negative factor affecting land values was the series of interest rate hikes over the past two years, mentioned by 23.4% of respondents, and the fall of commodity prices during 2023 was the second-most important concern with 22.7% responses identifying it.
Concerns about higher input costs, weather uncertainty, and stock market volatility and economic uncertainty were the next most frequently mentioned negative factors, mentioned by 11.4%, 7.2% and 5.1% of respondents, respectively. Land availability and uncertainty in agricultural profitability were each mentioned by roughly 3.6% of respondents.
In 2023, 39.5% of respondents reported fewer sales relative to 2022, which signals the slowing pace of the land market. On the other hand, 21% reported more sales, and 39.5% reported the same level of sales in 2023 compared to 2022. The South Central district has the lowest percentage of respondents who reported more sales, at 11%, while the East Central district has the highest percentage of respondents who reported more sales, with 28%. On the other hand, in six of the nine districts, more than 40% of respondents indicated fewer sales in 2023 than 2022.
