AMES, IA (DTN)--The average value of an acre of farmland in Iowa increased to $1,926 in 2001, continuing an upward trend that started last year after two years of declining values, according to an annual survey conducted at Iowa State University.
The increase averaged $69 an acre, or 3.7% statewide, said Michael Duffy, ISU Extension economist who directed the survey. The survey reported declines of 1.1% in 1999 and 1.9% in 1998. Before 1998, land values had increased for 11 consecutive years. This year's increase was reflected in individual increases in all 99 Iowa counties and in all grades of land.
Increases this year topped out at 7.1% in Fremont, Mills, Montgomery and Page counties in southwest Iowa and Jones and Scott Counties in eastern Iowa. At the low end of the scale, Dickinson, Lyon, O'Brien and Osceola Counties in northwest Iowa had increases of only 1.2%. Scott County, which has had the highest land values in the state for several years, exceeded the $3,000 mark for the second year in a row with an average value of $3,233.
The 2001 statewide average is $221 below the all-time high of $2,147 per acre reported in 1981. The greatest increases this year were in counties in the southwestern corner of the state and along the eastern border. Northwest and north central Iowa showed the smallest percentage increases.
Low grade land averaged $1,170 this year and showed a 4.7% increase over 2000. The $1,170 average is a record for low grade land. Previously, the highest level it had reached was $1,157 an acre in 1981. As land quality improved, the increase in value declined, with medium grade land averaging $1,768, a 3.9% increase, and high grade land averaging $2,407, a 3.6% increase.
Duffy said six factors were mentioned by more than 10% of the respondents as having positive impacts on land values this year. Lower interest rates led the list, mentioned by 48% of those participating in the survey. The effects of government payments and programs were viewed as a positive factor by 40%. Two factors, crop yields and the availability of land on the market, each were mentioned by 14%, and pressures from farm expansion and consolidation were viewed as a positive factor by 13%.
Negative pressures on farmland prices included poor markets and prices for farm commodities, mentioned by 59%, and world conditions, including the economy and the aftermath of the Sept. 11 attack, mentioned by 20%. Another 20% said uncertainty over future government programs was a negative factor.
Most buyers of Iowa farmland continue to be existing farmers who are increasing their holdings (67%), Duffy said, but investors made 27% of the purchases this year. This percentage has been consistent for the past four years and is a significant increase over 1997. Sales to investors were highest in south central Iowa at 41%, while sales to existing farmers were highest in west central Iowa at 74%. Eighteen percent of the survey respondents said there were more sales this year, 51% said the number of sales was about the same as last year, and 31% said there were fewer sales.
The highest land values by crop reporting district were reported in east central Iowa where the average was $2,340 per acre, up 6.1% from last year. The lowest average value was $1,039 per acre in south central Iowa, up 4.7% from last year.
Iowa State University has conducted an annual survey of land values since 1941. The ISU survey is conducted on Nov. 1 each year and is the only survey that reports land values in each of Iowa's 99 counties.
More than 1,100 licensed real estate brokers and others knowledgeable about farmland are invited to participate, and this year's survey drew 599 usable responses. Only the statewide data and the crop reporting district data are calculated directly from the survey results. Data collected in the survey are combined with data from the U.S. Census of Agriculture to determine county figures. The survey is cosponsored by the Iowa Agriculture and Home Economics Experiment Station and Iowa State University Extension.