By Andi Anderson
Iowa farmland values recorded a small increase during the past year, reflecting a market adjustment rather than major growth. According to an annual university survey, the average value of farmland increased slightly, but remained below the recent peak reached two years ago.
Strong yields, limited land availability, and steady demand helped support the market, while rising costs and economic pressures held values in check.
Rabail Chandio, assistant professor and extension economist at Iowa State University, explained that small percentage changes do not signal major shifts. “Changes of that size often reflect variation across counties and crop reporting districts rather than a consistent statewide trend,” she said. “It wasn’t a boom or a bust, just a very uneven adjustment, with the story changing as you move across the state. Strong yields, limited land supply and solid livestock income helped prop up values in some areas, but lower commodity prices, high interest rates and rising costs pulled them down in others.”
While nominal land values increased, inflation adjusted values declined. Chandio noted this difference can still provide benefits to farmers selling land. “A farmer selling land this year will receive more dollars than last year, and that can still support goals like paying down debt (whose real burden also shrinks with inflation), transitioning to retirement or reinvesting elsewhere. In that sense, the higher nominal price provides some benefit,” she said.
However, she cautioned that inflation reduces purchasing power. “Sellers may find that the proceeds won’t buy as much machinery, land or inputs as they would have a few years ago. So, while selling today can still improve a farmer’s financial position, the real economic gain is smaller than the nominal price increase suggests,” Chandio said.
Interest rates remained a major concern. “Because we haven’t seen any major reductions, the market is still feeling the weight of the rate hikes from 2022 and 2023. And since interest-rate effects take years, up to a decade, to be fully capitalized in land values, those post-COVID increases are still working their way through the system,” Chandio said.
Commodity prices were described as soft, with trade issues playing a limited role. “Tariffs may have been part of the background noise, but they weren’t a major driver of farmland values,” she said.
Overall, the market showed strong regional differences. “Even though the statewide average ticked up 0.7%, most counties actually saw declines once you adjust for inflation, and three crop reporting districts posted nominal drops. At the same time, places in the northeast saw increases of 3–4%, while parts of central Iowa slipped by 2–3%,” Chandio said.
The survey confirms a stable but divided farmland market shaped by economic pressures and regional conditions.
Photo Credit: depositphotos-simazoran
Categories: Iowa, Rural Lifestyle