March 2021 Wallace’s Farmer “MarketPlace Extra”

The early 2021 Iowa land market is the strongest it has been in many years. Few of the land market surveys yet reflect the underlying strength in the current market, as there is always a lag in reporting. However, let me say again – the land market in early 2021 is very strong. There are significantly more buyers than sellers right now, and as such, new listings and auctions are garnering significant attention from both farmers and investors alike. As has been well-documented in this column, this strength comes from the alignment of higher commodity prices, very low interest rates, a low inventory of farms available for sale/purchase, and significant government support. I believe the market strength will continue while these four mentioned factors remain aligned. However, when one or more of these factors begins to trend negatively, we will likely see the market adjust again. 

Case in point… In January, the 10-year Treasury started to tick higher, which has now continued into February. The 20-basis point move does not sound like much. But, considering where the 10-year Treasury spent most of 2020 (e.g., ranging from 0.60% to 0.90%), a 20-basis point move looks significant. Said differently, the 10-year Treasury, which is what most long-term mortgage rates are priced from, is 20% higher today than it was when we turned the calendar to 2021. This alone is probably not enough to move the land market because current mortgage rates remain remarkably low. However, the trend in interest rates has started to turn, indicating the bond market is beginning to factor in longer-term concerns with inflation and other monetary policy issues. Couple this with the change in administrations, and new questions being asked about farm and tax policies alike, and suddenly government support for agriculture is in a more precarious position than it has been through much of the past 4 years. Nothing has yet changed significantly enough to move the market off its current course – but again, changes in these value factors do have the potential to alter the market. For now, I remain optimistic about land values in 2021. And, the sales below are reflective of very strong optimism throughout the marketplace, as well. 

NORTHWEST

Lyon County:

85 +/- acres, located west of Alvord, recently sold at public auction for $16,800 per acre. The farm consisted of 82 +/- tillable acres with a CSR2 of 71.1, and equaled $245/CSR2 point on the tillable acres.

NORTH CENTRAL

Wright County:

79 +/- acres, located near Clarion, recently sold at public auction for $9,100 per acre. The farm consisted of 75 +/- tillable acres with a CSR2 of 85.6, and equaled $112/CSR2 point on the tillable acres.

NORTHEAST

Black Hawk County:

79 +/- acres, located west of Cedar Falls, recently sold at public auction for $9,600 per acre. The farm consisted of 77 +/- tillable acres with a CSR2 of 87.5, and equaled $112/CSR2 point on the tillable acres.

WEST CENTRAL

Calhoun County:

160 +/- acres, located northeast of Rinard, recently sold at public auction for $10,000 per acre. The farm consisted of 156 +/- tillable acres with a CSR2 of 80.8, and equaled $127/CSR2 point on the tillable acres.

CENTRAL

Jasper County:

75 +/- acres, located northeast of Newton, recently sold at public auction for $7,000 per acre. The farm consisted of 74 +/- tillable acres with a CSR2 of 62.5, and equaled $114/CSR2 point on the tillable acres.

EAST CENTRAL

Jones County:

207 +/- acres, located south of Center Junction, recently sold for $7,257 per acre. The farm consisted of 199 +/- tillable acres with a CSR2 of 66.7, and equaled $113/CSR2 point on the tillable acres.

SOUTHWEST

Montgomery County:

90 +/- acres, located south of Red Oak, recently sold at public auction for $6,975 per acre. The farm consisted of 75 +/- tillable acres with a CSR2 of 75.4, and equaled $111/CSR2 point on the tillable acres.

SOUTH CENTRAL

Warren County:                                                                            

55 +/- acres, located southwest of Pleasantville, recently sold for $6,500 per acre. The farm consisted of 51 +/- tillable acres with a CSR2 of 73.0, and equaled $96/CSR2 point on the tillable acres.

SOUTHEAST

Jefferson County:

160 +/- acres, located northwest of Fairfield, recently sold at a virtual online auction for $8,100 per acre. The farm consisted of 150 +/- tillable acres, with a CSR2 of 74.7, and equaled $116/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.