WATERLOO, Iowa --- The value of Iowa farm real estate jumped again last year.
A U.S. Department of Agriculture survey says the average value of Iowa agriculture real estate value -- a measurement of the value of all land and buildings on farms -- increased 20 percent, to $8,400 an acre from August 2012 to August 2013.
Iowa agriculture real estate values outgained all neighboring states, except North Dakota, where an energy boom fueled a 36.3 percent increase in values, to an average of $1,690 an acre.
Elsewhere around Iowa, Wisconsin edged up by only 1 percent, to $4,400 an acre. Illinois went up by 16.4 percent, to $7,800 an acre. Minnesota increased 17.3 percent, to $4,750; South Dakota, 28.6 percent, $1,800; Nebraska, 17.8 percent, $3,050; and Missouri, 6.9 percent, $3,100.
On average, cropland values across the U.S. grew by 9.4 percent, to $2,900, in the last year.
Iowa’s $8,400 per-acre farm real estate value ranked only behind the relatively tiny, largely urbanized Northeastern states New Jersey, at $12,700; Rhode Island, at $11,800; Connecticut, $11,000; and Massachusetts, $10,600. Values in those states either lost as much as 9 percent in Connecticut or gained as much as 4.1 percent, in New Jersey, over the last year, the USDA reported.
"The biggest thing that's been driving it has been the increase in farm income," said Michael Duffy, Iowa State University extension farm management specialist and economics professor of economics, who conducts a yearly land value survey each year.
Iowa cropland value increased by 17.8 percent, to $8,600 per acre in the last year. In all, farmland values across the state have jumped by 64 percent since 2010, Duffy said.
"This started back about 2007, when corn and soybean prices took off," he said. "There was a little correction in 2009, but since then, prices have been extremely favorable and we've seen record levels of farm income. That's been translated into record land values."
Regional changes in the average value of farm real estate ranged from a 23.1 percent increase in the Northern Plains region to no change in the Southeast region.
The highest farm real estate values were in the Corn Belt region at $6,400 per acre. The Mountain region had the lowest farm real estate value in the U.S., at $1,020 per acre.
U.S. cropland value increased by $460 per acre, or 13 percent, to $4,000 per acre. In the Northern Plains and Corn Belt regions, the average cropland value increased 25.0 and 16.1 percent, respectively, from the previous year.
However, in the Southeast region, cropland values decreased by 2.8 percent.
Pasture value in Iowa increased by 13.3 percent in the last year, to $3,400 per acre. Across the country, pasture value increased by 4.3 percent, to $1,200 an acre.
Much of the gain, however, is not current, said Troy Louwagie, land consultant and real estate broker with Hertz Farm Management Inc., which has farm operations in Waterloo, across Iowa and several other states.
"In my opinion, land prices are flat to soft since March or April," he said.
He said land values will remain in a "holding pattern" until the current crops are in.
"I tell people as we move forward, we’re in a bit of a roller coaster," he said. "Land is in strong hands and there’s minimal debt."
With lower grain prices there is a potential for land prices to soften, said Bill Northey, Iowa Secretary of Agriculture.
"In general, high land prices do make it expensive for young farmers to get started as their limited funds don’t go as far when land prices are high," Northey said. "For established farmers, there is not a lot of impact from fluctuating land prices unless they are buying or selling land. The increased profitability from agriculture that has led to higher-priced land is generally a good thing for farmers and rural communities.”