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Farmland values lose steam after years of rapid growth
After several years of sustained – and in some cases, explosive growth – farm real estate values in the U.S. are showing signs of slowing.
Key ag states such as Kansas, Iowa, and Nebraska saw double-digit percentage increases between 2021 and 2022, driven by high commodity prices and strong investor interest.
However, the most recent USDA data suggests that the growth rate is stabilizing in several key ag states:
Kansas farmland values surged by 22.8% in 2021-2022, before dropping to 13.6% in 2022-2023, and further slowing to 8.0% in 2023-2024. The per-acre price in Kansas rose to $2,970 in 2023-2024.
Iowa’s rate of increase dropped from a peak of 19.7% in 2021-2022 to 4.2% in 2023-2024. The per-acre price in Iowa rose to $9,420 in 2024.
Nebraska saw a sharp rise of 18.6% in 2021-2022 but has since cooled to 10.7% in 2022-2023 and 6.8% in 2023-2024. The per-acre price in Nebraska rose to $4,110 in 2024.
California’s farmland value increased 12.2% in 2020-2021 before slowing to 2.3% in 2023-2024. The per-acre price in California rose to $13,400 in 2024.
Wisconsin, a top dairy producer, peaked at 10% that same year, and had a 0% gain between 2023-2024. The per-acre price in Wisconsin rose to $6,120 in 2024.
Minnesota saw a 15.6% from 2021-2022 compared to a 5.6% increase from 2023-2024. The per-acre price in Minnesota rose to $6,450 in 2024.
Oklahoma’s growth peaked at 12.1% in 2020-2021 and 11.2% in 2021-2022, with growth slowing to 6.3% in 2023-2024.
The data shows Oklahoma’s decline was less dramatic than in most key ag Midwest states, but the trend suggests a broader cooling in the farm real estate market. The per-acre value in Oklahoma rose from $2,950 in 2021 to $3,720 in 2024.
The average price per acre across the U.S. in 2024 ranged from roughly $1,000 in parts of the Mountain and Appalachian regions to well above $10,000 in coastal states.
From 2018 to 2023, farmland values soared in key ag states — Kansas saw a staggering 60% increase, Oklahoma jumped 53%, and Nebraska climbed 48%, according to an analysis of USDA data.
Several factors contributed to the sharp increases beginning in 2021. A tight supply of available farmland, high commodity prices and growing investor interest fueled competition in the market. Local farmers, who have traditionally driven demand, are now competing with institutional investors, hedge funds, and pension funds for available land.
Some experts warned that a sustained slowdown was inevitable due to high-rising interest rates and higher operational costs.
Who owns the land?
According to the American Farmland Trust, more than 40% of U.S. farmland is owned by individuals over age 65, raising concerns about the future of land ownership. The AFT estimates that 300 million acres of farmland —, more than one-third of the 880 million acres of farm and ranch land in the U.S. — will change hands in the next 20 years.
A 2020 report from AgIS Capital, a Boston-based agricultural investment firm, found that institutional investment in farmland grew from $2.3 billion to $11.7 billion over the last decade. However, the report notes that large investors still control only a relatively small share — less than 2% — compared to individual landowners.
A July 2024 report by Investigate Midwest found that between 2017 and 2022, the U.S. saw a decline of 141,733 farms, with 80% of those closures involving operations generating less than $2,500 in annual sales. However, USDA data reveals a more nuanced shift: while the country lost 10,537 farms with annual sales between $100,000 and $499,999, the number of farms earning over $500,000 increased by more than 26,000.
Why are institutional investors buying up land? Because farmland is seen as a safe investment. Land tends to hold its value well, especially during economic uncertainty. It’s also an inflation hedge, meaning that as prices rise, farmland usually becomes more valuable, according to a May 2024 report by Financial Times.
Additional factors contributing to this shift include government incentives for wind and solar energy and population growth in rural towns driving the conversion of farmland into residential properties. Projections by American Farmland Trust indicate that 18.4 million acres could be lost to development by 2040, further tightening supply.
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