The land market across the Midwest continues to show strength in the second quarter of 2025, though there is a bit of price softening showing up in some areas.
“We have historic low supply and good demand, so that has really kept prices at a pretty stable level,” said Colton Lacina, vice president of real estate at Farmers National Company (FNC), based in Omaha, Neb., on Thursday.
“Looking across the different land groups, land is probably down 1% to 2%, but farmland has been on an upward trend for the last three to five years and is still strong. This is the first year recently of it turning a bit to the negative side, though nothing extreme,” he added.
Across the industry, FNC reported in January that land listings are down, on average, 25% from the active and accelerating value market experienced between 2020-2023.
Trends In Bellwether States
Lacina said higher interest rates, lower commodity prices and ongoing trade disputes have contributed to the slight downward movement of farmland values. The small reductions in value have shown up in key farming states, including Illinois and Iowa.
The 2024 Iowa State University Land Value Survey, released in mid-December, reported a 3.1% drop in farmland prices last year, bringing the average price per acre down year to $11,467.
“This decrease marks the end of a five-year trend of rising land prices, which included dramatic annual increases of 29% and 17% in prior years,” wrote Brooke Bouma Kohlsdorf, for American Farmland Owner.
While the nominal value in Iowa is lower than in 2023, it remains above 2022 levels. That reflects the lingering strength in the market today despite the correction, Kohlsdorf wrote.
In Illinois land values are likely to see a 3% decline in 2025, according to Nick Paulson, Gary Schnitkey and Carl Zulauf at the University of Illinois. However, they said multiple arguments for continued strength in farmland values could also be made.
“First, farmland remains an attractive asset with total returns (current plus capital returns) that are competitive with other asset classes, particularly over longer holding periods,” the Illinois economists wrote in a farmdoc Daily article last November. Second, turnover rates for farmland are expected to continue to remain low meaning that purchase opportunities are scarce. Finally, as farm operations continue to expand and alternative uses for farmland continue to grow, demand for an asset in fixed or declining supply will continue to remain strong.”
A report by the National Council of Real Estate Investment Fiduciaries shows that U.S. farmland delivered an annualized return of 10.2% over the past 30 years, outperforming many traditional real estate assets.
Off-Farm Investors In Play
Lacina said he sees farmland purchases remaining strong this year with farmers and nonfarmers alike, noting he is seeing an uptick in off-farm investors, which he said fall into two different camps.
“We have institutional investors, and then we have what we call more of a local investor, and we’ve seen a lot more local investor interest in the last month,” he noted. “Potentially a businessman or businesswoman in town, who maybe own the hardware store, and are looking to diversify and get into farmland,” he said.
With the ongoing turbulence in the stock market, Lacina said he expects interest from buyers in rural communities to continue as land is seen as a stable investment for the long-term. He also doesn’t anticipate farmers will stop buying land, either, as the opportunities to purchase local parcels arise. Many farmers are paying cash.
“We’re still seeing a lot of cash transactions with our largest buying group, which is the agricultural producers,” he said. “We do see some farmer land purchases being financed, but I’d say most are still cash buys.”
Three additional types of individuals and organizations Lucina said he sees buying farmland now include:
1. Individuals interested in growing their own produce and/or developing a local market for produce. “There’s definitely an increase in demand for smaller acreages that are going into large gardens for what I call micro-farming,” Lacina said.
2. Recreational activities continue to drive land sales in many areas. “Individuals are looking to get out of the city and have 80 acres and a little cabin. We’ve seen strong demand there, and I don’t see that falling off, really,” he said.
3. There is increased demand by individuals and companies that want to use solar energy. “The wind business has slowed down, while solar has picked up,” Lacina said.
He pointed out that there are two different kinds of land purchases commonly made for solar. One is individuals who either want solar for their own home or as an investment in supplying local communities. The second type is for a corporation’s use.
“Geographically, there are certain areas where that’s really hot right now. Some areas in Illinois have seen a lot of activity. Also down in South Texas, with the new data centers being built, we’re seeing a large request for land around those data centers for solar,” Lacina explained. “There’s increased demand for electricity, which can take years to come on the grid if you have to build a coal plant or a nuclear plant, and solar is much quicker.”
Lacina said spring historically is the slowest sales period for the land market year-over-year, and that has been true for 2025.
“As we work through summer here and into the early fall, we will probably see an uptick in supply,” he said. “How big that supply is going to be, we don’t know, but we believe there will be more opportunities coming to market.” Those opportunities have the potential to benefit buyers and sellers alike, he added.
Get more of Lacina’s insights about land values and where they’re headed on AgriTalk.
Your next read: Farmers Back U.S. Efforts To Rebalance Trade With China Despite Economic Hardship
