“Modest” may be the most fitting word for the results of the 2023 Iowa State University’s Land Values Survey. Modest gains for 2023 and modest expectations for 2024, according to the annual survey results of licensed real estate brokers, farm managers, appraisers, agricultural lenders, county assessors and land market condition experts.
RELATED: Here is some background on the survey:
The Iowa State University Land Value Survey was initiated in 1941 and is sponsored annually by Iowa State University. Only the state average and the district averages are based directly on Iowa State University survey data. County estimates are derived using a procedure that combines Iowa State University survey results with data from the US Census of Agriculture. Since 2014, the survey has been conducted by the Center for Agricultural and Rural Development in the Department of Economics at Iowa State University and Iowa State University Extension and Outreach.
“We are still seeing an increase (in land values) but it’s a lot more modest,” said Dr. Rabail Chandio, assistant professor in ISU’s department of economics, who led the survey.
That more modest increase resulted in a 3.7% yearly appreciation in land values across Iowa. While that number is solid, it pales in comparison to what took place in the past two years.
2023: +3.7%
2022: +17%
2021: +29%
(Source: Iowa State University Land Values Survey)
“We’re still at the peak,” Chandio said of 2023’s record values, “But we’re seeing the peak slow down a little.
RELATED: Watch Dr. Rabail Chandio’s full video analysis of the 2023 ISU Land Values Survey on YouTube here.
She isn’t predicting a collapse in land values in 2024. However, the survey found that some participants felt that it is possible for values to either see “modest increases” or “modest decreases” next year.
“If it’s a long-term game, that means farmland will remain a safer investment in times of uncertainty, in times of inflation. That’s something we still continue to see in the market.”
The 3.7% increase in average acre value equals $11,835, up $424 from last year. And the growth across the three land quality levels was consistent.
Average value per acre
High quality: +3.5% (+$479)
Medium quality: 3.8% (+$401)
Low quality: 4.0% (+$296)
The state has some of the most valuable farmland anywhere in the country. That’s especially true in the northwest region of Iowa. However, the survey found that values there declined slightly since 2022, while the southern part – which generally has lower quality soil and lower values – saw substantially higher year-to-year gains in comparison.
Iowa land values by region
Northwest Iowa: $14,753 per acre (-0.8%)
Southeast Iowa: &10,460 per acre (+12.8%)
South central Iowa: $7,482 per acre (+9.6%)
Chandio suggested that the changes could be the southern parts of the state catching up with some of the recent value appreciation that other regions already experienced, as well as recreational opportunities gaining more popularity. Using the lower quality farmland for recreational activities like hunting not only brings a new revenue opportunity but also makes the area less impacted by grain prices and input cost increases.
The outlook for 2024 is more challenging, according to the survey’s respondents. This is again where “modest” comes into play. The survey found that some respondents expected farmland values to dip less than 5%, rather than the stratospheric increases of the past three years.
“We’re kind of approaching a plateau in the land market,” Chandio summarized.
