After a year of reprieve from declining farmland prices in Washington County, values slipped again in 2018, losing an average of $144 per acre, or 1.73 percent.
According to the results of the 2018 ISU Land Value Survey, released on Dec. 12 on the Iowa State University Campus in Ames, three years’decline was halted with a value increase in 2017. According to the 2017 report, land values showed a $143 increase. The 2018 report shows values have slid back. Negative factors listed by respondents to the survey were low commodity prices and higher interest rates statewide. The survey said 34 percent of respondents reported lower sales in 2018 than in 2017.
The annual survey is conducted by the Center for Agricultural and Rural Development at Iowa State and ISU Extension and Outreach.
Positive influences on the value of farmland listed in the survey include limited land supply and strong yields. Another widely mentioned factor was credit availability.
According to the survey, compiled by assistant professor and Iowa State University Extension economist Wendong Zhang, the average statewide value of an acre of Iowa farmland is now estimated to be $7,264, a decline of $62 per acre under 2017. The survey was conducted by the Center for Agricultural and Rural Development at ISU. The results of the survey are consistent with results from the Federal Reserve Bank of Chicago, the Realtors Land institute, and the U.S. Department of Agriculture. The survey is based on reports by agricultural professionals knowledgeable of land market conditions. The 2018 survey was based on 793 usable responses from 624 agricultural professionals.
“Respondents had mixed views regarding the strength of the farmland market one year from now, but in general expect higher land value five years from now,” Zhang said. “About half the respondents forecast an increase in their local land market in one year, while 35 percent expected a lower land value and 1.5 percent forecast no change.”
Washington County farm values are listed as being $8,194 per acre, down from $8,339 in 2017, The east central district, which Washington County is part of, showed the a percentage loss in value of 2.6 percent, brining the average value of an acre of land to $8,004.
The average value represents the statewide average of low, medium and high quality farmland. For the sixth year in a row, Scott and Decatur counties reported the highest and lowest farmland values, respectively.
“Across the Midwest there are signs of deteorating credit conditions and a continued, prolonged downturn in the agricultural economy, although with a much slower pace,” Zhang said. “This recent decline in the Iowa farmland market is a result of lower commodity prices and higher interest expenses. Given the rising interest rates and still-high uncertainty regarding U.S. agricultural trade, the land market in Iowa might see another modest decline next year despite an overall stabilizing trend.”
The land value survey was initiated in 1941 and is sponsored annually by ISU. The survey is typically conducted every November and the results are released mid-December. Only the state average and the district averages are based directly on the ISU survey data. The county estimates are driven using a procedure that combines the ISU survey results with data from the U.S. Census of Agriculture.