Is the current run-up in land values going to lead to a crash?
The all-time high record statewide average price for Iowa farmland is an inflation-adjusted average of $5,711 in 1979, according to data compiled by Iowa State University, which runs an annual survey. The average price fell by more than two-thirds in the following decade, contributing to Iowa’s worst farm recession since the 1930s. A number of people are wondering if the latest run-up is leading to a possible crash. Thomas Hoenig, president of the Federal Reserve Bank of Chicago, said last week: “I see the value of farmland going up and people looking to use lots of liquidity, looking for opportunities to invest their money in farmland. I see prices are rising above what the productive capacity of that land can support.” However, U.S. Secretary of Agriculture Tom Vilsack last week pointed out that a significant cushion between debt and asset values should also keep rising farmland prices from turning into bubble and bursting. The Chicago Fed’s latest land value survey shows that the ma
