Iowa Farmland Prices Falling Farmland Bubble?

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Iowa Farmland Prices Falling Farmland Bubble Predictors Get Their Day

A new report out this week by the Chicago Fed Reserve has some news that wasn’t unexpected.  With 6 years of record land prices behind us we knew an adjustment in values was in ahead.  The big question is how big will the adjustment be?  The prevailing figure I see being thrown around is 20% over the next 2-3 years.  For at least the last 4 years the term “Farmland Bubble” has been thrown around, as an Auctioneer I’ve had my share of arguments about what lies ahead.  I’ve always said “I don’t see a crash” and I still see no crash coming.  In fact last Thursday I conducted an auction in northern Iowa, with cash corn prices that day opening at $4.22 we still sold the farm for $10,000 per tillable acre.

Farmland bubble

The recent report by the Fed shows that Iowa as a whole state gained 9% appreciation in farmland prices from October 1, 2012 to October 1, 2013 which matches previous survey’s released but whats important to see is that the report shows from July 1, 2013 to October 1, 2013 we were running -1% appreciation.  Its easy to see the correlation between the July-August drop in commodities to the drop in farmland prices.  We can assume the current patter will prevail moving forward and we’ll begin losing value.  That value loss will not be equal and across the board which I’ll explain below.

Download the Chicago Fed Report here Iowa Farmland Prices

As an auctioneer and licensed real estate broker here are my current observations in the Iowa farmland market.

#1 There has been an increase in No-Sales around the state.  A No-Sale is when an auction does not achieve a sellers expected reserve price.  Our company has not experienced a no sale and with this threat out there its more important than ever to choose the right auctioneer, choosing the wrong one can turn into a disaster right now.

#2 Middle of the road and poor quality farmland is still selling but at a reduced price from where it was at last year.  If you have a low CSR and below you’ll see this reflected in the value of your farm.

#3 High quality farms are bringing a premium, this is the bright spot in the farmland market right now.  A report by the Iowa Realtors Land Institute recently quoted the figure of 10% premium for high quality farms in Iowa. Prices on high quality land with a high CSR is bringing top dollar still today, again if your auction is properly marketed and conducted you can still realize top of the market farmland prices.

Are you considering selling a farm in Iowa this season its important you give us a call at DreamDirt Farm & Ranch Real Estate to help you understand the value of your property and create a professional marketing plan that will help you achieve your farm’s full value.

To contact us call Toll Free (855)376-3478 or click fill out this farm Selling Farmland in Iowa

Jason Smith is the licensed real estate broker and principal auctioneer at DreamDirt Farm & Ranch Real Estate at 101 S. Noyes Street Mondamin, Iowa