No sign of a slowdown in skyrocketing farmland prices—at least not in northeast Iowa.
An 80 acre tract of crop ground about 12 miles north of Cedar Rapids sold this week for 9,025 dollars per acre. Three weeks ago, 80 acres in southern Mitchell County, Iowa brought 10,000 an acre.
Hertz Real Estate broker Troy Louwagie says both tracts were purchased by investors and were paid for with cash—and he says most of the people buying land are in a very good financial position.
“Guys that are buying it, they’re either buying with cash or buying with substantial land down—or good equity. Most of these buyers are holding it for the long term,” Louwagie says. “So even if we had a small correction, I don’t see anyone getting in trouble or being forced to sell.”
Louwagie thinks as long as commodity prices remain strong and interest rates remain low, land values will hold up well. But he says tighter crop margins going forward could slow the pace.
“That is one concern as we head through 2011. I think all the input costs—seed, fertilizer, herbicide costs—are all inching up,” he says. “So it will tighten up the margins a little bit—and that could slow things down a little bit.
Louwagie says a slight correction in the land market is possible, but he is not concerned that prices will crash.
Louwagie works out of Hertz’ Mt. Vernon office.