What Is Your Iowa Farmland Worth?
As a landowner, it is important to understand how much your farmland is worth. Whether you are considering selling in the near future or have no intention of selling at all, you should be able to confidently answer one simple question: What is my farm worth?
How Do You Determine Your Land’s Value?
Let’s start with the basics.
Every farm is different, and it’s natural to want a valuation that reflects the specific characteristics of your land. The most accurate way to determine your farmland’s value is to have a professional appraisal completed.
During the appraisal process, an appraiser evaluates multiple factors that influence value before determining a final price point.
Because farmland prices are constantly changing, we at Whitaker Marketing Group closely monitor market conditions and track nearly every land sale across Iowa.
Key Factors That Go Into a Farm Valuation
Location
Location plays a major role in land value. Neighboring farmers and how aggressive they are in expanding their operations can significantly influence your final sale price.
Farming Ability and Shape
Farms that are easy to operate tend to bring higher prices. Square, flat tracts with productive soils allow equipment to move efficiently, which saves time and money for the operator.
Size of the Farm
The size of a tract affects both the total purchase price and the number of potential buyers. Smaller tracts often attract more bidders and can bring higher per-acre prices. However, when acreage drops below roughly 40 acres, farming efficiency may decline, which can negatively impact value.
CSR, CSR2, Soil Type, Slope, and Drainage
In Iowa, the Corn Suitability Rating (CSR) measures farmland productivity on a scale from 0.5 to 100. Iowa State University later introduced CSR2, which places greater emphasis on water-holding capacity.
Soil type, slope, and drainage all influence a farm’s CSR2 score and, ultimately, its value.
Water Sources, Hunting, and Recreational Value
Iowa is widely known for whitetail hunting, and recreational features can increase land value. Since 2020, demand for recreational ground has risen, contributing to higher prices in certain areas. More information can be found through the RLI Land Trends Survey.
Building Potential and Zoning
If your land is located within roughly 20 miles of a growing community and allows for residential construction, its value may increase substantially. However, zoning and building requirements vary by county, so it’s important to consult your local assessor’s office.
In real estate terms, this is referred to as highest and best use. In some cases, farming may not be the highest and best use of the land.
What Are Iowa Land Values Doing Statewide?
Before evaluating an individual farm, it’s helpful to understand statewide land value trends.
One of the most reliable public resources is the Iowa State University Extension and Outreach Farmland Value Survey through Ag Decision Maker. This report provides statewide and regional land value estimates, trend data, and insight into factors affecting Iowa’s land market.
Additional insight can be found through the Iowa Chapter of the Realtor Land Institute.
What Factors Influence the Farmland Market?
Several forces are always influencing the farmland market, and many of them directly impact land values.
- Soil quality and soil type
- China’s demand for U.S. grain
- Percentage of tillable acres
- Current interest rates
- Land location
- 1031 tax-deferred exchanges
- Drainage systems
- Farming practices
- Carbon credit opportunities
- Yield history
- Soil fertility data
- Commodity prices
- Government programs
- PPP and MFP payments
What Ultimately Affects Your Land Value?
Markets are driven by perception and demand. At the end of the day, farmland is worth what a buyer is willing to pay.
Whitaker Marketing Group – Iowa Farm Real Estate Experts
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