April 2021 Wallace’s Farmer “MarketPlace Extra”

The strength in the Iowa farmland market continues as we approach spring planting 2021. The mid-March release from the Iowa Chapter of REALTORS® Land Institute (RLI) reflected an average increase of 7.8% for statewide farmland values. Of course, there are differences across both the various geographic regions as well as the different land qualities. One thing is clear, however – land values are stronger today than they were 6 months ago. This is the first Iowa-market-based survey that reflected the strength that, for several months, many brokers and auctioneers had been anecdotally describing. But because many of the surveys are done only annually or biannually, it can take time for the surveys to catch up with the market. This time-lag has been especially true for a market that has moved as quickly as the Iowa land market has over the past 6 months.

Thinking back, the market has come a long way from 12 months ago. A year ago, COVID had just entered the scene, and there was tremendous uncertainty as to how the pandemic might affect various asset classes, including farmland. Since that time, we have seen several key things occur that have impacted agriculture; Interest rates collapsed in early 2020 with the investment community’s flight to safety, and the commitment from the Federal Reserve to keep rates low into the foreseeable future. Although rates have now started to tick higher again, this low-rate environment has greatly supported farmland values in early 2021. Second, previously weak export demand for commodity crops greatly accelerated through 2020, with the USMCA being implemented and the Phase 1 agreement with China yielding results. What were large global surpluses in early 2020 turned to much thinner inventories than anyone could have imagined last summer. As a result, corn and soybean prices are at their highest levels since 2012-2013, and farmers and investors alike are seeing on-farm profit possibilities for 2021 not seen for almost a decade. Combine these factors with a very small number of farms being publicly available for sale, and it is easy to understand why the demand for farms is much stronger than the recent or current supply of farms available for purchase.

There remain questions to be answered about the recent change in administrations, and specifically, how farm and tax policies may change in the coming months. But nothing has changed significantly enough to move the market off its current course. So, for now, I remain generally optimistic about land values in 2021. The recent sales detailed continue to show how strong the optimism is throughout the market. 

NORTHWEST

Pocahontas County:

80 +/- acres, located northwest of Fonda, recently sold at public auction for $10,150 per acre. The farm consisted of 74 +/- tillable acres with a CSR2 of 84.6, and equaled $130/CSR2 point on the tillable acres.

NORTH CENTRAL

Cerro Gordo County:

80 +/- acres, located near Rockwell, recently sold at public auction for $12,000 per acre. The farm consisted of 74 +/- tillable acres with a CSR2 of 79.6, and equaled $163/CSR2 point on the tillable acres.

NORTHEAST

Fayette County:

112 +/- acres, located east of Sumner, recently sold for $9,105 per acre. The farm consisted of 106 +/- tillable acres with a CSR2 of 89.0, and equaled $108/CSR2 point on the tillable acres.

WEST CENTRAL

Greene County:

80 +/- acres, located northwest of Jamaica, recently sold at an virtual online auction for $11,400 per acre. The farm consisted of 77 +/- tillable acres with a CSR2 of 87.8, and equaled $135/CSR2 point on the tillable acres.

CENTRAL

Grundy County:

80 +/- acres, located near Wellsburg, recently sold at public auction for $13,900 per acre. The farm consisted of 75 +/- tillable acres with a CSR2 of 68.7, and equaled $216/CSR2 point on the tillable acres. Note: This farm also included more than $18,000 in annual income from wind turbine payments.

EAST CENTRAL

Johnson County:

154 +/- acres, located southeast of Solon, recently sold for $7,400 per acre. The mixed-use farm consisted of 60 +/- tillable acres with a CSR2 of 63.3, 63 +/- acres of CRP, and the remaining 31 acres in pasture, a pond, and a small 2-bed/1-bath ranch-style home built around 1900.

SOUTHWEST

Adair County:

274 +/- acres, located north of Orient, recently sold at public auction for $7,000 per acre. The farm consisted of 236 +/- tillable acres with a CSR2 of 58.4, and equaled $139/CSR2 point on the tillable acres. Note: Of the 236 +/- tillable acres, 143 +/- acres are being cropped while 93 +/- acres are enrolled in CRP. This land also included more than $33,000 in annual income from wind turbine payments.

SOUTH CENTRAL

Appanoose County:                                                                    

126 +/- acres, located northwest of Cincinnati, recently sold at a virtual online auction for $3,700 per acre. The farm consisted of 111 +/- tillable acres with a CSR2 of 40.2, and equaled $104/CSR2 point on the tillable acres.

SOUTHEAST

Louisa County:

130 +/- acres, located northwest of Columbus Junction, recently sold at public auction for $7,400 per acre. The farm consisted of 121 +/- tillable acres, with a CSR2 of 69.0, and equaled $115/CSR2 point on the tillable acres.

Hertz Real Estate Services compiled this list, but not all sales were handled by Hertz. Call Hertz at 515-382-1500/800-593-5263 or visit www.Hertz.ag.