Iowa land prices increase 16.5 percent
2:50 PM
Posted: Tuesday, March 20, 2007
WEST DES MOINES, Iowa (AP) -- High crop prices and demand created by the renewable fuels industry pushed the state's farmland value up 16.5 percent over the past year, according to a survey of appraisers and farm real estate brokers released Tuesday.
"One of the positive factors influencing the land market is, bottom line, strong commodity prices," said Troy Louwagie, a trends and values chairman with the Realtors Land Institute. The group's Iowa Farm and Land Chapter No. 2 released the March 2007 Land Trends and Values Survey Tuesday in West Des Moines.
The increase, Louwagie said, is a product of the "euphoria from renewable fuels that has pushed the grain markets."
A limited amount of land offered for sale, good crop yields and positive attitudes on the industry were other factors that increased land values, he said. Certain tax deferred exchanges and favorable long-term interest rates also impacted the price of land.
The average land value increased 13.6 percent from September 2006 to March 2007. Between March 2006 and September 2006, the land value increased 2.9 percent. The combined increase over the one-year period was 16.5 percent.
For the highest quality land, which has the potential to produce 160 bushels per acre of corn, the price over the last six months rose from a state average of $3,797 per acre to $4,313.
The last time increases were as high was in September 1996 at 16 percent. Over the last five years, Iowa's farmland is up a total of 57 percent, Louwagie said.
The nine crop reporting districts across the state showed an increase in the recent survey, Louwagie said. For tillable land, the increases ranged from about 4.9 percent in south-central Iowa to 20 percent in the north-central part of the state. The value for non-tillable pasture and timber also increased.
There were some negative factors that kept the land value from climbing even higher, Louwagie said. That included uncertainty about the 2007 Farm Bill, increased fuel and fertilizer cost and slightly higher interest rates.
Farmers were the majority of buyers but investors are still grabbing up land.
The outlook for the next few years was positive, Louwagie said, but with a possibility of more volatility depending on commodity prices.
"If we would see a decrease in corn, bean prices ... I think we would see a correction awfully quick," he said. "It could be a $300 or $400 (per acre) correction."
The real estate brokers and appraisers estimated the value of bare, unimproved land with a sale price on cash basis. The Iowa Farm and Land Realtors farmland value survey has been conducted since 1978.
"One of the positive factors influencing the land market is, bottom line, strong commodity prices," said Troy Louwagie, a trends and values chairman with the Realtors Land Institute. The group's Iowa Farm and Land Chapter No. 2 released the March 2007 Land Trends and Values Survey Tuesday in West Des Moines.
The increase, Louwagie said, is a product of the "euphoria from renewable fuels that has pushed the grain markets."
A limited amount of land offered for sale, good crop yields and positive attitudes on the industry were other factors that increased land values, he said. Certain tax deferred exchanges and favorable long-term interest rates also impacted the price of land.
The average land value increased 13.6 percent from September 2006 to March 2007. Between March 2006 and September 2006, the land value increased 2.9 percent. The combined increase over the one-year period was 16.5 percent.
For the highest quality land, which has the potential to produce 160 bushels per acre of corn, the price over the last six months rose from a state average of $3,797 per acre to $4,313.
The last time increases were as high was in September 1996 at 16 percent. Over the last five years, Iowa's farmland is up a total of 57 percent, Louwagie said.
The nine crop reporting districts across the state showed an increase in the recent survey, Louwagie said. For tillable land, the increases ranged from about 4.9 percent in south-central Iowa to 20 percent in the north-central part of the state. The value for non-tillable pasture and timber also increased.
There were some negative factors that kept the land value from climbing even higher, Louwagie said. That included uncertainty about the 2007 Farm Bill, increased fuel and fertilizer cost and slightly higher interest rates.
Farmers were the majority of buyers but investors are still grabbing up land.
The outlook for the next few years was positive, Louwagie said, but with a possibility of more volatility depending on commodity prices.
"If we would see a decrease in corn, bean prices ... I think we would see a correction awfully quick," he said. "It could be a $300 or $400 (per acre) correction."
The real estate brokers and appraisers estimated the value of bare, unimproved land with a sale price on cash basis. The Iowa Farm and Land Realtors farmland value survey has been conducted since 1978.
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