June 2024 Wallace’s Farmer MarketPlace Extra

Clues from the Market – #5 Local Historical Wealth

This is the final installment in my 5-part series on the most important factors that influence farmland values. These factors include 1) commodity prices, 2) interest rates, 3) input prices, 4) land sale volume, and 5) local historical wealth. This month, we’re talking about local historical wealth. Out of the 5 mentioned factors that influence land values, this one may be the most ambiguous, because it can be difficult to come up with a precise measure of local wealth.

We all know those neighborhoods where land values seem to include a premium that is not common to the broader market. Some may call it an “Old Money” neighborhood. Over time, my observation has been that many of these financially vibrant neighborhoods have a correlation to very productive soil types, and often, a diversity of enterprises.

 For example, consider the highly competitive and record-setting land sales in the northwest corner of the State of Iowa. It just so happens that O’Brien County (#1), Osceola County (#3), and Sioux County (#4) have 3 of the top 4 Iowa County Average CSR2 ratings (Grundy County in central Iowa is #2). Over the long-term, the most productive soils will outperform other areas, and this long-term benefit accrual creates a fertile environment for wealth creation. In addition to consistently strong soils, there is also a significant livestock presence in Northwest Iowa that provides earning and income-stream diversity. Add in productive livestock operations, with access to manure, and you have another enhancement to top-quality soils.

In my view, it all starts with the basic quality of the land. I recognize this principle does not play out on every single sale that occurs in an entire market. But more often than not, the general principle will hold. And so, I’ll conclude by saying again – from area-to-area I have observed a strong correlation between quality of soils, local historical wealth, and the competitiveness/strength in local land markets.

NORTHWEST

Buena Vista County:

78 +/- acres, located southeast of Sioux Rapids, recently sold at public auction for $14,100 per acre. The farm consisted of 74 +/- tillable acres with a CSR2 of 85.3, and equaled $174/CSR2 point on the tillable acres.

NORTH CENTRAL

Mitchell County:

153 +/- acres, located near Riceville, recently sold at public auction for $7,900 per acre. The farm consisted of 142 +/- tillable acres with a CSR2 of 71.1, and equaled $120/CSR2 point on the tillable acres.

NORTHEAST

Clayton County:

406 +/- acres, located north of Strawberry Point, recently sold at public auction for $9,410 per acre. The farm consisted of 332 +/- tillable acres with a CSR2 of 50.0, and equaled $230/CSR2 point on the tillable acres. Note: This aggregation was offered in 7 auction parcels but was purchased as a single unit; the non-tillable land was primarily timbered draws, terraces, waterways, and waste.

WEST CENTRAL

Calhoun County:

57 +/- acres, located southwest of Rockwell City, recently sold at public auction for $12,750 per acre. The farm consisted of 56 +/- tillable acres with a CSR2 of 88.7, and equaled $146/CSR2 point on the tillable acres. Note: This farm was under lease for 2024, with the buyer receiving a $300/tillable acre cash rent credit.

CENTRAL

Hamilton County:

80 +/- acres, located east of Stratford, recently sold at public auction for $15,600 per acre. The farm consisted of 77 +/- tillable acres with a CSR2 of 81.8, and equaled $198/CSR2 point on the tillable acres. Note: This farm included a wind turbine built in 2022 with an annual payment over $18,000.

EAST CENTRAL

Clinton County:

80 +/- acres, located southwest of Camanche, recently sold for $13,800 per acre. The farm consisted of 77 +/- tillable acres with a CSR2 of 77.3, and equaled $185/CSR2 point on the tillable acres.

SOUTHWEST

Fremont County:

132 +/- acres, located south of Bartlett, recently sold at public auction for $8,700 per acre. The farm consisted of 131 +/- tillable acres, with a CSR2 of 70.9, and equaled $123/CSR2 point on the tillable acres.

SOUTH CENTRAL

Wayne County:

160 +/- acres, located west of Corydon, recently sold at public auction for $7,100 per acre. The farm consisted of 142 +/- tillable acres with a CSR2 of 43.9, and equaled $182/CSR2 point on the tillable acres.

SOUTHEAST

Washington County:

80 +/- acres, located south of Wellman, recently sold at public auction for $20,750 per acre. The farm consisted of 76 +/- tillable acres with a CSR2 of 86.0, and equaled $254/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. 

Related Articles