What is Happening with Iowa s Land Values: Results from ISU s Latest Survey

What is Happening with Iowa’s Land Values: Results from ISU’s Latest Survey Dr. Wendong Zhang Assistant Professor of Economics and Extension Economist...
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What is Happening with Iowa’s Land Values: Results from ISU’s Latest Survey Dr. Wendong Zhang Assistant Professor of Economics and Extension Economist Ag Bankers Conference, March 22, 2016

A Quick Introduction: Dr. Wendong Zhang Dr. Mike Duffy can never be replaced – Grown up in a rural county in NE China – Attended college in Shanghai and Hong Kong – Ph.D. in Ag Econ in 2015 from Ohio State – 2012 summer intern at USDA-ERS on farm economy and farmland values – Research and extension interests: land value, land ownership, agriculture and the environment, China Ag

Why Care About Farmland Market?

3,500.0

Distribution of U.S. Farm Assets

3,000.0

Billion $

2,500.0 2,000.0 1,500.0 1,000.0 500.0 0.0

2011

2012

2013

2014

2015F

Real estate

Livestock and poultry

Machinery and motor vehicles

Crops stored

Purchased inputs

Financial assets

Source: USDA ERS

Current Situation of Iowa Farmland Market

STATEWIDE AVERAGE $7,633

down down

-3.9% -$310

AVERAGE VALUES all farmland 1950−2015 Nominal vs. Inflation Adjusted Iowa Farmland Values 10000 9000

Nominal

7000

Real

6000 5000 4000 3000 2000 1000

Year

2013

2010

2007

2004

2001

1998

1995

1992

1989

1986

1983

1980

1977

1974

1971

1968

1965

1962

1959

1956

1953

0 1950

Land values ($/acre)

8000

% Change in Iowa Farmland Values 1951-2015 40.0% 30.0% 20.0% 10.0% 0.0% -10.0% -20.0% -30.0% -40.0%

US Farm Income 19902025

Source: USDA OCE

Iowa Corn Prices vs. Costs

Source: Chad Hart, Mike Duffy

Iowa Soybean Prices vs. Costs

Source: Chad Hart, Mike Duffy

Iowa Land Values by District and County

Not Every Iowa District Are Created Equal

Land Values by District and Land Quality, 2015 District

Average Value

% Change

High Quality

% Change

Medium Quality

% Change

Low Quality

% Change

Northwest

$9,685

0.7%

$11,229

0.3%

$8,834

1.6%

$6,252

2.6%

North Central

$7,962

-6.7%

$8,976

-6.8%

$7,352

-6.6%

$5,372

-1.0%

Northeast

$7,861

-3.6%

$9,575

-5.0%

$7,460

-1.7%

$5,242

-0.3%

West Central

$8,061

-4.3%

$9,684

-5.8%

$7,581

-3.2%

$5,082

-1.8%

Central

$8,505

-6.4%

$10,087

-6.4%

$7,758

-6.8%

$5,292

-5.2%

East Central

$8,506

-5.6%

$10,289

-6.8%

$7,934

-5.4%

$5,366

-2.1%

Southwest

$6,372

-2.2%

$8,031

-5.3%

$6,038

-1.2%

$4,070

5.4%

South Central

$4,397

-1.7%

$6,445

-3.3%

$4,282

-0.8%

$2,750

-2.1%

Southeast

$6,892

-4.5%

$9,536

-6.0%

$6,525

-2.8%

$3,797

-2.4%

State Avg.

$7,633

-3.9%

$9,364

-5.0%

$7,127

-3.2%

$4,834

-0.9%

Livestock and Crop Inventory by District Inventory 2012

Harvested Acres 2015

Chickens, Layers

Hogs

Milk Cows

Cattle

Corn

Soybean

Northwest

30%

26%

29%

22%

15%

16%

North Central

64%

16%

4%

6%

14%

13%

Northeast

1%

12%

51%

16%

12%

8%

West Central

0%

13%

1%

13%

15%

16%

Central

3%

13%

1%

7%

15%

14%

East Central

1%

5%

10%

11%

10%

10%

Southwest

0%

2%

0%

9%

7%

9%

South Central

0%

2%

1%

9%

4%

5%

Southeast

1%

11%

3%

6%

7%

8%

State Inventory

20.4 million

20.4 million

0.17 million

2.34 million

13.2 million

9.8 million

Crop and Livestock Prices

Source: Chicago Fed

Iowa Farmland Sale Activity since November 2014

More

Northwest North Central Northeast West Central Central East Central Southwest South Central Southeast STATE

Less Percent

Same

13 9 11 4 12 5 11 6 18

44 64 57 71 70 60 62 76 47

43 27 33 25 18 35 27 18 35

10

60

30

Iowa Land Values by County 2015

Iowa Land Value % Change by County 2014 2015

Iowa Farmland Purchases by Buyer Types 1986-2015 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Existing Farmers

Investors

New Farmers

Other

Iowa Method of Sale Method

2010

2011

2012

2013

2014

2015

Public Auction

37%

47%

50%

47%

53%

48%

Realtor

28%

21%

18%

18%

18%

23%

Private

28%

21%

24%

30%

24%

23%

Sealed Bid

7%

10%

8%

5%

5%

6%

Other

1%