The value of an average acre of good Iowa farmland rose 5.1 percent from 2012 to $8,716, according to Iowa State University Extension's annual Iowa Land Value Survey conducted in November.
It marked the fourth year in a row that farmland values have reached historic peaks.
The ISU survey is similar to results of other recent Iowa farmland value surveys. The Federal Reserve Bank of Chicago recorded a 14 percent increase from the third quarter of 2012 to the same quarter of 2013, and the Iowa Chapter of the Realtors Land Institute reported a 10.6 percent rise from Sept. 1, 2012, to Sept. 1, 2013.
The average value of a good acre of Linn County farmland rose 10.72 percent to $10,175 in November from $9,189 in November 2012. In Johnson County, the value of an average acre of good farmland increased 10.27 percent to $10,175 in November from $8,774 in the same month last year.
Scott County, with an estimated $12,413 average value for all farmland, saw the highest average county values in the Iowa State survey. Scott County also had the highest percentage increase at 12.45 percent.
Mike Duffy, ISU economics professor and extension farm management economist who conducts the survey, said the latest Iowa Land Survey shows a market in flux, with strong and weak price sales occurring at the same time.
"The key question is if this shows the market is going to settle, if it is just pausing before another takeoff in values, or if the market has peaked and due for a correction," Duffy said.
Duffy said farmland values are highly correlated with gross farm income. A majority of the survey respondents were concerned about income and 76 percent cited lower commodity prices as a negative factor affecting the land markets.
"Farm income is a strong indicator for the direction land values will go, but there are other factors as well," Duffy said. "Interest rates remain low, but the percent of respondents who reported less sales than in 2012 was the highest it’s been since 1985."
Duffy said the odds are against a major collapse in land values. But, if projections of a new lower level for commodity prices hold, Duffy believes land values will decline.
The ISU economist said many respondents commented that the current situation might be a plateau.
The Iowa Land Value Survey was initiated in 1941 and is sponsored by the Iowa Agriculture and Home Economics Experiment Station at ISU. The survey is based on reports by licensed real estate brokers and selected individuals considered knowledgeable of land market conditions.