Iowa farmland value is reaching record high levels - KWWL - Eastern Iowa Breaking News, Weather, Closings

Iowa farmland value is reaching record high levels

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BLACK HAWK COUNTY (KWWL) -

A new survey, out this week from the Iowa State University Extension, suggests the value of an average acre of land has jumped 32 percent in just twelve months. The Iowa Land Value Survey was conducted in November and reflects what other agencies have reported. Iowa farmland values are at record highs -- worth $6,708, up from $5,064 in 2010.

In Eastern Iowa, the most valuable land is located in Black Hawk and Grundy Counties. The ISU Extension is estimating each acre in these counties is worth more than eight thousand dollars.

As for the reason? ISU Economist Dr. Michael Duffy, one of the men who conducted the survey, said the price of an acre of land is directly tied to gross farm income. Corn and soybean prices have skyrocketed over the past six years. Corn was worth less than two dollars per bushel in 2005, it's now estimated at more than six dollars. Bean prices have more than doubled in that same amount of time.

Another cause for an increase in value is the recent instability in the stock market. People are choosing to buy farmland, or are not selling the land they already own, because they're not sure where else to invest their money.

After watching what happened in the housing market, Duffy said many people are concerned whether the land value bubble will burst.

"This rate of increase in 2011 has led to concerns that farmland may be the next speculative bubble," Duffy said. "Some people feel farmers are setting themselves up for a fall similar to the 1980s. Without a doubt, it's an interesting time and something to watch, but it isn't a time to panic."

Part of the reason for the jump in value may be due to an increase in sale by auction. As one survey respondent put it -- economics may get you to an auction, but emotion often leads to a purchase.

The most valuable farmland in Iowa is in O'Brein County. An acre of land is worth an estimated $9,513.

If you'd like to see the survey results for yourself, or see how your county measures up, click here.

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