The value of Midwest farmland has steadily climbed in the last seven years, largely due to high crop prices and low interest rates, but land prices may be leveling off, according to a new report, the Pioneer Press reports.
A new report from Rabobank International foresees a gradual decline in farmland values, perhaps 15 to 20 percent over three years, after interest rates begin to rise and crop prices level off a bit, the newspaper reports.
Land values went up in late 2011 and early in 2012, rising more than projected by the bank, Sterling Liddell, a vice president of Rabobank’s food and agribusiness research and advisory, told Reuters.
In Minnesota, cropland values went up about 20 percent between 2012 and 2013, up from an average of $4,050 per acre to $4,850, according a U.S. Department of Agriculture survey, the Star Tribune reported last month. Nationwide, farmland value was $4,000 per acre, up $460, or 13 percent, the newspaper reported.
Among Midwestern states, North Dakota has had the sharpest farmland value increases in the last year, due to an energy boom. The jump was also high in Iowa, which had a 20 percent leap in land values, to $8,400 an acre, according to a USDA survey, the Associated Press reports.
Observers say they don't expect sudden, steep drops in Iowa land values, the Des Moines Register reports. “Are we going to see the bubble burst? No,” said Kyle Hansen, a real estate agent at Hertz Farm Management in Nevada, Iowa, told the Register. More likely, he said, “we’ll see prices slowly deflate. ... It’s not dropping overnight.”