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Serving: IA

Fewer transactions, no less land interest

deyanarobova/Getty images Corn stalks with silos in the background
End-of-2021 transactions brought a rush of sales, but there are fewer sales ahead of 2022 planting.

The momentum and strength in the late 2021 and early 2022 farmland market has been amazing to observe, and a lot of fun to work in. I do not recall a more active and positive sales environment in my 25-plus years in the farmland business. Depending on the value survey and/or publication you read, Iowa farmland has appreciated 20% to 40% year-over-year!

These mentioned positive returns are appreciation only — and we all know 2021 was also a strong income year. Without question, farmland as an asset class has had an incredible run over the past 12 months.

I do believe the strength in the land market will continue to flush some additional new sales into the market before 2022 spring planting. But, the major slug of off-season sales volume was pushed through before the end of 2021, with many sellers having been motivated to get a sale completed and closed before year-end, in hopes of avoiding possible tax law changes.

That said, I think the volume of sales in the first half of 2022 will moderate greatly when compared to the last six to eight months of 2021. In addition, I suspect we will begin to see some light headwinds develop this year.

First, farmers are budgeting smaller cash flow margins on 2022 production, as higher input prices are cutting into profit potential.

Second, the posture of the Federal Reserve Bank has shifted substantially in the past 60 to 90 days, with inflation data heating up to levels not seen in 40-plus years.

Therefore, 2022 may mark the beginning of an interest rate reset. I do not expect either of these headwinds to cause whiplash in the land market, but they are topics to pay attention to throughout this year. Looking at the sale data below, it is easy to see that there has been a lot of excitement throughout the Iowa market.

Northwest

Dickinson County. Northeast of Lake Park, 80 acres sold at public auction for $14,000 per acre. The farm consisted of 76 tillable acres with a CSR2 (corn suitability rating) of 85.7, and equaled $172 per CSR2 point on the tillable acres.

North central

Floyd County. Near Rudd, 78 acres sold at public auction for $14,050 per acre. The farm consisted of 77 tillable acres with a CSR2 of 86.8, and equaled $164 per CSR2 point on the tillable acres.

Northeast

Black Hawk County. Northeast of Waterloo, 105 acres sold at public auction for $8,700 per acre. The farm consisted of 101 tillable acres with a CSR2 of 58.0, and equaled $156 per CSR2 point on the tillable acres.

West central

Ida County. Southwest of Ida Grove, 146 acres sold at public auction for $11,250 per acre. The farm consisted of 136 tillable acres with a CSR2 of 79.8, and equaled $151 per CSR2 point on the tillable acres.

Central

Grundy County. Northwest of Wellsburg, 70 acres sold at public auction for $17,100 per acre. The farm consisted of 70 tillable acres with a CSR2 of 94.4, and equaled $181 per CSR2 point on the tillable acres.

East central

Cedar County. South of Mechanicsville, 110 acres sold for $16,000 per acre. The farm consisted of 105 tillable acres with a CSR2 of 92.0, and equaled $182 per CSR2 point on the tillable acres.

Land values map

Southwest

Cass County. Southwest of Brayton, 160 acres sold at public auction for $16,000 per acre. The farm consisted of 154 tillable acres with a CSR2 of 90.0, and equaled $185 per CSR2 point on the tillable acres.

South central

Union County. Southwest of Creston, 94 acres sold at public auction for $11,250 per acre. The farm consisted of 94 tillable acres with a CSR2 of 75.9, and equaled $148 per CSR2 point on the tillable acres.

Southeast

Des Moines County. North of Burlington, 40 acres sold at public auction for $10,000 per acre. The farm consisted of 39 tillable acres with a CSR2 of 78.0, and equaled $131 per CSR2 point on the tillable acres.

Hertz Real Estate Services compiled this list, but not all sales were handled by Hertz. Call Hertz at 515-382-1500 or 800-593-5263, or visit Hertz.ag.

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