Land value experts predict modest declines, stable crop prices

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AMES – Agricultural professionals who attended the Iowa State University Soil Management and Land Valuation Conference in May expect a continued modest decline in land values, according to the June edition of the Ag Decision Maker newsletter.

More than 150 participants provided their input, and they also predicted a stabling of cash crop prices.

Wendong Zhang, assistant professor and extension economist at Iowa State, said the results reflect uncertainty with U.S.-China trade relations, and also the low returns expected for production agriculture.

“In general, people are more pessimistic about the land markets in the near-term,” said Zhang. “When you look across the board — people are seeing a continued decline in the land market, in part because of trade uncertainties, but also because of stagnant farm income.”

Overall, respondents expect a 2% decline in land values over the next six months, from May through November, and for land values to remain flat from November 2019 to November 2020.

Slight increases are expected beyond November 2020, and respondents expect the increases to continue more strongly in five years, with a continued ascent thereafter.

Zhang said producers should be cautious not to read too far into the future because so much can change. However, even with near-term declines that are projected, he said it’s important to remember that land values are still at or near historic highs.

The respondents included ag lenders, farm managers, real estate brokers and realtors, appraisers and auctioneers.

The group also provided cash rent estimates, which showed gross capitalization rates to be stable at around 3.3% through 2040. This means they expect cash rent to rise or decrease at the same pace as land values.

This news release was sent to the Herald.

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