Midwest farmland values moved higher in 2025, reversing the modest decline seen in 2024, according to the latest AgLetter from the Federal Reserve Bank of Chicago.
The report points to an important split in the market: land values strengthened, but farm credit conditions weakened. That combination matters for buyers, sellers, and landowners across Iowa and the broader Midwest as they plan for 2026.
At Whitaker Marketing Group, we track both sides of that equation closely because land value trends and lending conditions often shape buyer behavior just as much as the farm itself.
What the Chicago Fed AgLetter Covers
The Chicago Fed’s AgLetter is a quarterly publication based on surveys of agricultural bankers in the Seventh Federal Reserve District, which includes:
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Illinois
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Indiana
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Iowa
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Wisconsin
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Michigan
The findings referenced here are based on responses collected as of January 1, 2026, and they provide a snapshot of farmland values and credit conditions heading into the new year.
This kind of report is useful for understanding the regional picture, especially when compared with what we are seeing in day-to-day land marketing and buyer activity.
Land Values Rebounded Across the Seventh District in 2025
One of the biggest takeaways is clear: agricultural land values in the Seventh District increased 6% in 2025, following a modest decrease in 2024.
In addition, values for “good” farmland rose 2% in the fourth quarter of 2025 compared with the third quarter. That quarter-over-quarter increase suggests continued demand for quality land, even as other parts of the ag economy remain under pressure.
2025 Annual Change in “Good” Farmland Values by State
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Illinois: +3%
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Indiana: +9%
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Iowa: +7%
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Wisconsin: +9%
The pattern continues to support what many in the market have observed: well-located, productive farmland with strong farmability and long-term utility tends to hold interest even in more cautious lending environments.
Credit Conditions Continued to Weaken in Late 2025
While land values improved, the report also showed continued deterioration in agricultural credit conditions during the fourth quarter of 2025.
The share of the District’s farm loan portfolio classified as having “major” or “severe” repayment problems rose to 5.6% in Q4 2025, the highest level since the second quarter of 2020.
Repayment rates for non-real-estate agricultural loans were lower in October through December 2025 than a year earlier, while renewals and extensions of those loans increased.
Additional Credit Highlights from the Survey
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47% of bankers observed higher loan demand than a year earlier, while 12% observed lower demand.
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20% reported having fewer funds available to lend, while 3% reported more.
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32% noted lower repayment rates, while 1% reported higher rates.
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37% of banks tightened credit standards for farm loans compared with a year earlier.
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77% of banks did not raise collateral requirements for non-real-estate farm loans, while 23% required more collateral.
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Agricultural interest rates edged lower from the end of Q3 to the end of Q4 2025 and were at their lowest level since Q3 2022.
What This Means for Buyers and Sellers
For Sellers
The rebound in farmland values is an encouraging sign, especially for high-quality tracts. However, in a market where lenders may be more selective, strong marketing and property positioning still matter.
That is especially true for:
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High-quality row-crop farms
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Well-drained and highly farmable tracts
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Properties with strong access and productivity history
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Farms with income diversification or recreational appeal
For Buyers
Financing conditions may matter just as much as price expectations in 2026. Even with slightly lower rates, underwriting standards and repayment scrutiny can influence who is able to compete aggressively.
Because of that, buyers may benefit from:
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Starting lender conversations earlier
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Confirming terms and collateral expectations before auction or offer deadlines
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Staying focused on long-term utility and income potential
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Remaining disciplined on underwriting assumptions
Outlook for 2026: Mixed Signals to Start the Year
Survey respondents projected mixed conditions for early 2026. More bankers expected farmland values to decline in the first quarter of 2026 (20%) than to increase (7%).
They also expected farmer capital expenditures to decline again across several categories, including:
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Land purchases and improvements
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Buildings and facilities
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Machinery and equipment
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Trucks and autos
At the same time, lending expectations were split:
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Farm real estate loan volumes were forecast to be slightly lower in Q1 2026 compared with Q1 2025
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Non-real-estate loan volumes (including operating loans, feeder cattle loans, and USDA FSA-guaranteed loans) were expected to increase
These projections suggest a market that may stay active, but with more caution and selectivity.
Final Takeaway
The 2025 rebound in Midwest farmland values is a positive signal. However, tighter credit conditions and weaker repayment trends add an important layer of caution heading into 2026.
The big picture is not just about whether land values are up or down. It is also about who can finance purchases, how lenders are underwriting risk, and how prepared buyers and sellers are when they enter the market.
