Experts say farmland values may be heading for a plateau, even though several variables could still shift the market.
By Cassidy Walter
Market Momentum Slowing
Headlines of record-setting sales and rapid appreciation created major excitement in the farmland market last year. As 2023 continues, industry experts say that momentum is easing. Prices remain strong, but growth is flattening.
“We’ll likely see strong prices for high-quality, well-located farms,” says Tim Koch, executive vice president of business development for Farm Credit Services of America. “Lower-quality land may soften as we move toward the end of the year. Overall, I expect a flattening in values.”
Jackson Takach, chief economist at Farmer Mac, agrees. “Values are still rising quarter over quarter, but only at 1%–3%, not at the double-digit pace we saw in 2021 and 2022.”
Recent Sales Data Echo the Slowdown
Farmers National Company’s latest Regional Land Value Report analyzed high-quality farmland across 18 states. All states saw average acre prices rise between 2021 and 2023. However, the rate of increase slowed in most areas during the past year.
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Iowa shows the biggest shift:
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2021: $11,900 per acre
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2022: $15,000 per acre
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2023: $15,400 per acre
The jump from 2022 to 2023 was just $400.
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Arkansas increased $400 from 2021–2022 and $300 from 2022–2023.
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Kansas and Oklahoma saw similar increases both years.
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Texas was the only state where increases were larger in 2023 than 2022.
According to Paul Schadegg, senior vice president of real estate operations for Farmers National Co., many farmers are entering a period of increased borrowing after several years of strong liquidity. This may limit how aggressively they pursue land purchases.
Even so, he expects solid demand: “Looking ahead, we anticipate strong competition for high-quality land offered for sale.”
Iowa Values Hold Steady
The Realtors Land Institute Iowa Chapter reported that Iowa farmland values rose 0.8% from September 2022 to March 2023. That’s modest compared to recent years:
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March 2022 – Sept. 2022: +2.8%
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Sept. 2021 – March 2022: +14.1%
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March 2021 – Sept. 2021: +18.8%
RLI Iowa President David Whitaker describes the latest trend as steady.
“There’s enough money in the market to hold values firm,” Whitaker says. “Farmland remains the asset everyone wants to own—and keep.”
Key Market Variables Still in Play
Although the market appears stable, several major factors could shift land values quickly.
Commodity Prices
- Commodity prices remain the strongest link to farmland values. Higher prices improve liquidity and push demand upward.
- Whitaker explains it simply:
“When farmers feel like they have money in their pocket, they spend it—on equipment, improvements, or farmland.” - Volatility continues in 2023. Weather reports, acreage updates, and global trade events caused sharp price swings throughout the year. While these spikes are smaller than last year’s highs, corn and soybeans remain elevated compared to most of the past decade.
- Takach notes that falling prices could increase the number of farms for sale, creating downward pressure. “If we have a strong crop and softer prices, 2024 could bring more supply—and potentially less demand.”
Inflation
- Some analysts argue that persistent inflation may support higher land values, even if appreciation slows.
- “It’s not clear we’ve seen the peak,” says Steve Bruere, president of Peoples Company.
- But with the Consumer Price Index falling each month since mid-2022, the long-term trend remains uncertain.
Interest Rates
- Higher borrowing costs are becoming a larger concern. As Schadegg explains, more purchases now require financing.
- “When you add interest expenses, profitability becomes the key question. Higher rates create a real obstacle for buyers moving forward.”
Outside Investors Have Limited Influence
- Despite frequent discussion about investors driving farmland values, most purchases still come from farm operators.
- According to Purdue economist Todd Kuethe, investors set a price floor, not the ceiling. Farmers—with stronger motivation and local connection—continue to dominate bidding. Farmers National Company reports that operators make up nearly 80% of their sales.
Farmland Remains a Strong Long-Term Asset
- Even with a cooling trend, experts agree that farmland remains a solid long-term investment.
- “Ag real estate has a consistent return over time,” says Koch. “When you smooth out the peaks and valleys, the track record is strong.”
- Whitaker adds that farmland rarely changes hands—often only once every 60 years. That scarcity keeps demand strong, especially when the “right” farm becomes available.
- “It won’t be for sale again until you die,” he says. “If you’re interested, you better fire.”
