Have Land Values Peaked? Expert Sees Prices Steady With Record-Setting Sales in Iowa

Land values have hit record levels in the past year. According to USDA's National Agricultural Statistics Service, U.S. land values so far in 2022 are up $420 per acre, or 12.4%, to an average $3,800 per acre. The biggest percentage increase comes in Iowa, but other Midwestern states aren’t far behind. The question everyone wants answered is can land prices keep going up?

In times of high commodity prices, it's not uncommon to see land values rise, but there have been some record-setting values and percentage increases this year. For example, Iowa land values have increased 21.4% to $9,400 per acre; South Dakota, up nearly 19%; and Minnesota, 17.4%.

Dennis Reyman, immediate past president of the American Society of Farm Managers and Rural Appraisers, says it’s not just farmers pushing the market. "A lot of it is a hedge on inflation, and a lot more investors are involved. Plus farmers have enough cash to push it higher as well. There's a lot more volume on the market."

Those dynamics have resulted in record prices in his immediate area of northwest Iowa. “We’ve tracked over 50 sales that are $20,000 or higher and a lot of them in that $22,000 to $23,000 range. There have been at least four sales over $25,000 or higher but in specific areas with quality land," he adds.

So are land values getting close to peaking? Reyman says it doesn’t look like the market is saturated yet and higher interest rates haven’t been a big deterrent. The biggest determining factor, according to Reyman, is the crop size this fall and where commodity prices go from here.

The Federal Reserve Bank of Chicago, the district that includes Iowa and most of Illinois and Indiana, just reported land values rose 22% in the second quarter of 2022, adding to double digit gains in the previous two quarters.