By Zach Jensen,
Iowa farmland values are decreasing — ending a five-year growth trend, and at least one Iowa State University educator believes the decreasing valuation could be the start of a new downward pattern.
The annual Iowa State University Land Value Survey found farmland values decreased an average of 3.1 percent in 2024 — with decreases ranging from $369 to $11,467 per acre. Information from ISU said the decrease nearly erases a 3.7 percent increase from 2023. The nominal value of an acre of farmland this year fell from last year’s record high, according to the survey, but is still higher than the nominal value in 2022.
Falling commodity prices, persistently-high interest rates and elevated input costs were found to be the main factors affecting profit margins and placed increasing downward pressure on land values across the state, said Rabail Chandio, an assistant professor at ISU’s College of Agriculture and Life Sciences.
Chandio said, by comparison, the increase in Iowa farmland values in 2023 was driven by a combination of favorable factors.
“One significant cause was the limited supply of available farmland, which naturally increased competition among buyers,” Chandio said. “This scarcity was coupled with stronger-than-expected crop yields.”
Despite drought conditions, which ended in the summer of 2024, Iowa’s average corn yield of 200 bushels per acre and a soybean yield of 58 bushels per acre outperformed expectations, Chandio said — boosting farm income and overall market optimism in 2023.
Additionally, farmland remained a sought-after investment in 2023, Chandio said, particularly for those looking to hedge against economic uncertainty, with investor demand providing further upward pressure on land values.
But, just one year later, in 2024, plummeting corn and soybean prices mixed with a shortage of available farmland and elevated input costs brought the value of farmland down.
“Falling commodity prices, which were still high at an absolute level and had supported higher incomes in prior years, became a significant downward pressure,” Chandio said. “For example, USDA forecasted season-average corn and soybean prices at $4.10 per bushel and $10.20 per bushel, respectively— marking declines of 10 percent and 18 percent from the previous year — squeezing farm profitability.”
That decrease brings the markets down to nearly-pre-pandemic prices, but Chandio said expenses haven’t fallen at the same rate.
“Elevated input costs — including fertilizers, machinery and fuel — further tightened farmers’ profit margins, making land investments less attractive,” the professor said. “Although some areas saw slight increases due to specific local factors — such as investor-driven demand for recreational land in south-central Iowa — these exceptions were not enough to counteract broader declines statewide.”
Chandio said that when adjusting for inflation, the 2024 average value is 2.5 percent lower than 2013’s inflation-adjusted values.
“Although the dollar amount for land in 2024 is higher than it was in 2013, inflation has reduced the real value of those dollars,” she said. “Simply put, $11,467 per acre in 2024 buys less in terms of goods and services than $8,716 per acre did in 2013. This means that, while nominal prices have risen, landowners are not necessarily wealthier in terms of real purchasing power compared to a decade ago.”
Iowa’s farmland values aren’t expected to stop falling, either. Chandio said that, looking ahead to 2025, the forecast for Iowa farmland values suggests “modest declines may continue.”
“Falling commodity prices are expected to keep farm incomes under pressure, which in turn reduces land values,” she explained. “While lower inflation is likely to lead to slightly-reduced interest rates, the effects of these reductions may not be felt immediately. Interest rate changes typically take time — sometimes up to a decade — to be fully reflected in land values. At present, the lingering effects of rate hikes from 2022, and the high rates that persisted through 2023 and much of 2024, continue to weigh on the market and are likely to exert downward pressure for the next couple of years. Without substantial rate cuts in 2025, which are not part of the Federal Reserve’s current plan, the earlier rate increases will remain a significant headwind.”
Additionally, while lower inflation may stabilize costs, that doesn’t mean prices — including input costs — will drop. Instead, Chandio said lower inflation signals that prices are no longer increasing as rapidly, but farmers will still contend with elevated expenses.
“These persistent costs, coupled with high borrowing rates, will likely continue to limit net incomes and, by extension, land values in 2025 — unless borrowing costs decline significantly and quickly,” she said. “As things stand, it seems reasonable to expect this current period of adjustment to extend for another year or two. This cautious outlook is shared by most survey respondents, with 58 percent predicting declines in land values over the next year, though most expect these to be modest — at less than 5 percent.”
Chandio said the long-term view, however, is much more optimistic.
“A significant 80 percent of respondents expect land values to rise over the next five years — with 36 percent forecasting increases of 10–20 percent,” Chandio said. “This confidence reflects expectations of stable or slightly-improving commodity prices and the gradual easing of economic pressures. While the short term may be challenging, the market’s fundamental strength and resilience point to a more positive trajectory in the years ahead.”
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