Farmland Prices Come Back to Earth After Years of Growth

Farmland values continued to climb in many areas in 2024, but the increases were more modest compared with recent years. Experts say prices are likely to dip in 2025. 

“It’s a mixed bag,” says Steve Bruere, president of Peoples Co., an integrated land solutions firm headquartered in Des Moines, Iowa. “For every sale you think might be a little weaker, there’s another one the next day that’s incredibly strong. But there’s just not as much strength in the market right now. You can just feel that with the number of people participating in the auctions and the number of bids, and when you’re talking to folks. They’re just not as aggressively pursuing land right now.” 

Bruere says there is a lot of pessimism in the market, as the farm economy has weakened and sale prices aren’t as high as they were even earlier this year. 

Just the Numbers 

USDA

In the Land Values 2024 Summary, the USDA says the average value for farm real estate increased 5% from 2023. The term “farm real estate” refers to all land and buildings on farms. The report also says the cropland average increased 4.7%. Those increases pale compared with recent surveys:

2023: Average farm real estate value increased 7.4% year-over-year, and the cropland average was up 8.1%.

2022: Average farm real estate value increased 12.4% year-over-year, and the cropland average was up 14.3%.

Purdue University

The 2024 Purdue Farmland Value and Cash Rent Survey found farmland prices in Indiana had another record-setting year, with the average value for top-quality farmland increasing 4.8%. Average and poor-quality farmland saw average value increases of 3.7% and 4.4%, respectively. The Purdue survey considers “tillable, bare” land. 

The survey, which was conducted in June, states, “Survey respondents suggest that this price growth principally occurred during the second half of 2023, with prices retreating a bit in the first half of 2024.” 

Similar to the USDA’s findings, increases for top-quality Indiana farmland were not as high as those in recent years: 

• 2023: Up 7.3% in average value
• 2022: Up 30.9% in average value

Realtors Land Institute — Iowa Chapter

The September survey from the Iowa chapter of the Realtors Land Institute found the average value of tillable Iowa acres declined 8.1% year-over-year. In September 2023, the group found a small increase year-over-year, but the two preceding years’ increases were much larger: 

• 2023: 0.6% 
• 2022: 16.9%
• 2021: 26.6%

Federal Reserve Bank of Chicago

The Federal Reserve Bank of Chicago covers the seventh U.S. Federal Reserve district, which includes Iowa; the northern two-thirds of Illinois; most of Indiana except the southern tip; the lower peninsula of Michigan; and the southern half of Wisconsin. 

In August, the bank said the value of “good” farmland in the district rose 2% from July 2023 to July 2024, the smallest year-over-year increase since the third quarter of 2020. Illinois, Indiana, and Wisconsin all saw increases in value, while Iowa saw a 3% decrease. 

A Rational Market

As the farm economy and the land market cool down, prices are returning to more attractive levels for buyers, says Bruere of Peoples Co. 

“I think the market’s actually more rational right now than I’ve seen it in a long time,” he says, adding that in some cases during recent years, buyers overpaid for land. 

“So as it levels out here and comes back to earth a little bit … we’re getting to a level that is actually going to be quite exciting for people who are committed to buying farmland for the long haul,” he concludes. 

Bruere and Todd Kuethe, the Schrader Endowed Chair in Farmland Economics at Purdue University, agree: A price decline in 2025 is likely. 

“I don’t think prices are going to fall off of the cliff,” Kuethe says. “We’ll see a modest decline. And then the question is, how long will that continue? If you look at the history of our survey and of land markets here in the Corn Belt, most declines are only a couple years in length.” 

Kuethe says in 2025 he would expect any decline in Corn Belt farmland values to be less than 4%. Over the next few years, he expects a relatively flat market, in which values may go up or down by small percentages. 

Market Drivers 

A variety of factors can influence the land market; the Purdue survey asked respondents to evaluate the influence of 10 market forces. In speaking with Kuethe and Bruere, the three that dominated discussions were farm income, interest rates, and supply. 

Farm Income

The USDA is projecting net farm income to fall in 2024 for the second consecutive year. Weekly nearby corn and soybean futures peaked in 2022 and have trended downward since. 

Meanwhile, Bruere says farmers are still feeling the impact of inflation on inputs squeezing margins. He says farmers are tightening their belts in this bear market and not chasing new land, as they were in recent years. 

Interest Rates

In September, the U.S. Federal Reserve’s Federal Open Market Committee lowered the target range for the federal funds rate for the first time since 2020. The federal funds rate influences interest rates throughout the economy. In 2022 and 2023, the committee raised the target range a total of 11 times. 

In recent years, interest rates’ impact on the land market was combated by higher cash reserves. As those cash reserves have drawn down, interest rates have been a bigger factor, and this was seen in 2023 as well. As Kuethe puts it, the impact of interest rates is “growing in intensity.” 

Supply

Bruere and Kuethe agree a lack of supply is supporting the land market. 

“It’s a buffer that will probably keep it from falling to the degree that it otherwise would,” Bruere says. 

Only 1% to 2% of farmland is sold each year, he notes, and as the market cools, farmers will be less inclined to sell. 

“The thing about farmland that’s really unique is that there’s very little debt against it,” he says. “So if you don’t like the price, you just don’t sell it. Then that further constricts supply.” 

A Good (Long-Term) Investment

While farmland values may be headed for a dip, Kuethe and Bruere agree: If you can afford it, it is still a good investment. 

“Generally, I think the safest view to have of land markets is the farther you look out, the more optimistic you get,” Kuethe says. 

The USDA’s 2024 survey reveals the average per-acre value of farm real estate has increased nearly 94% since 2010. 

Bruere says his advice is to not let the current pessimism in the market stop you from making a purchase you can afford. “I can’t tell you how many times I have had people tell me after they passed on something, ‘Gosh, darn it, I should have bought that farm.’”