Farmland Values Continuing to Rise

Mike Duffy
Mike Duffy

Contributed by Mike Duffy, Extension Farm Management Specialist, mduffy@iastate.edu.

Participants at this year’s Iowa State University Soil Management and Land Valuation (SMLVC) conference projected Iowa farmland values would average $9,425 per acre on November 1st of this year.  This would represent a 14% increase over the Iowa State University land value survey the increase would be from November to November.

The conference participants also estimate land values 18 month in advance.  The estimate for November 1st 2014 is an average $10,042 per acre.  This is a 6.5% increase over their projection for November 1st 2013.

The SMLVC is the longest running conference at Iowa State.  This was the 86th year.  Since 1964 the participants, mostly farm managers, rural appraisers, lenders and real estate brokers, have been asked to project land values 6 and 18 months in advance.  In addition they are asked to estimate the value for two distant years.  The conference is approved for continuing education credit for real estate brokers and appraisers.  This year 280 people attended the conference.

The participants are usually very accurate for the 6 month projection.  Since 1964 the 6 month projections have averaged 2% below the final Iowa State land value estimate.  The group is slightly worse for the 18 month projection averaging 6% below the ISU value.  For the past decade the group has averaged only 1% higher for 6 month projection but the 18 month projections over the past decade have averaged 9% below the final ISU land values for that year. 

The estimates have varied widely in times of rapidly changing land values.  The group missed the major turns in land values over the past 50 years.  Nonetheless they have averaged very close to the final land value for the year.

The group projected the high one-third of Iowa farmland would average $11,599 per acre on November 1, 2013.  They also projected the average and low third would be $9,260 and $7,379 per acre respectively. 

What will land values do in the coming months is an open question.  Will the experts’ projection miss a major turn or will they continue to be quite accurate with their forecasts?  No one knows for sure but the groups’ projections do represent the collective thinking of a large number of farmland experts in Iowa.

There is considerable discussion whether or not Iowa farmland is on a speculative bubble.  For now the fundamentals of high income and low interest rates continue to hold.  For how long is a legitimate question but at least for now the experts expect land to continue to increase but at a slower rate.

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