Northwest Iowa — Farmland values likely will continue in a downward spiral or hold steady at a low point if commodity prices and farm incomes remain at their current levels. That’s the analysis of Randy Dickhut, senior vice president of real estate operations at Farmers National Company.
He says that some land sales may bring surprisingly higher prices for the second half of 2017 and the volume of land sales also may increase due to financial stress being experienced in the ag economy.
Land leasing and land value survey information has just been announced by Iowa State University (ISU) Extension and Outreach, and for the third year in a row, the ISU report says land values declined. Statewide, the average reduction was $450/acre, down 5.9 percent from November, 2015. The highest land values were reported here in Northwest Iowa, with $9,243/acre which was lower by 4.6 percent from last year. Positive factors bolstering values are lower interest rates, strong balance sheets and working capital accumulations from the 2000s. The single largest negative factor is lower commodity prices that contributed to a 17.2 percent reduction to net farm income to $66.9 billion (August, 2016) the lowest since 2009. You can review the full survey report at http://www.card.iastate.edu/land-value/2016/2016-Iowa-Land-Value-Survey-Overview.pdf
Dickhut says that agricultural land values in most areas can be expected to continue to gradually decline over the next several years if commodity prices and the underlying farm incomes remain at current low levels. He says that small interest rate increases, potential tax law changes, and world economic uncertainties will also keep some outside pressure on land prices in the coming year.
