(Ames) -- The annual Iowa State University survey shows the statewide value of an acre of farmland increased by 2.3 percent and now is estimated at $7,432.
Wendong Zhang conducts the survey and doesn’t think it’s a sign of any big upward trend.
“It is an increase — which is encouraging — but I wouldn’t hail this as a solid rebound of the market, ” he says, “because the magnitude is still quite modest. It just exceeded the pace of inflation.” That increase means an acre of farm ground is worth $168 more than the year before.
He says low commodity prices and low interest rates both helped keep the values from going up much more. Zhang, who is an assistant professor of economics, doesn’t think values are dropping off either.
“All the eight districts, except for northeast Iowa, showed modest growth. Especially in central Iowa, we see some growth at a level of five percent. In general I think shows a stabilizing land market,” Zhang says.
Zhang says low dairy prices hurt the land values in the northeast district.
The northwest district reported the highest overall land values at $9,352 an acre. The south-central district reported the lowest overall land values at $4,487 an acre. Scott County reported the highest land values at $10,837 an acre. Decatur County reported the lowest at $3,586 an acre. It’s the seventh straight year Scott and Decatur have been the top and bottom county.
Low-quality land statewide saw an increase of 3.3% — more than the higher quality soils. Zhang says the general economy is still strong and that tens leads to more recreational demand for land and that brings up the price of the lower quality land. He says the demand for urban development help bring up the land in the central Iowa district.
Zhang says there are two things he is watching that could impact the land values in the coming year. He says one is whether we will have a trade deals and the details of those deals — while the other is whether or not the Fed Reserve cuts the interest rates again or stay with the original plan to gradually increase the interest rates. Zhang says the rate cut would be more positive news for landowners.
“In general lower interest rates tend to support land values,” Zhang says.
The I.S.U. Land Value Survey started in 1941. Zhang has been overseeing the survey for the last five years.