Look Out Iowa! Cropland Auction Sets Fresh Record in North Dakota

As mortgage rates climb to 20-year highs, near 8%, current high-interest rates are eating away at the housing market. This year is currently on pace to see the fewest home sales since 2008. However, farmland sales aren't witnessing the same sticker shock. In North Dakota, Pifer's Auctioneers says it just set a new land sale record in the state. 

According to a post on Facebook, on November 1, Pifer's Auctioneers hosted a live and online land auction. The farm featured 320 acres of highly-productive land in Pembina County, N.D. That's the very northeastern corner of the state in the Red River Valley. The auction house says the land sold for $17,500 per deeded acre to a family farm operation. It says that shattered the all-time high for North Dakota cropland. Roughly 30 bidders were on hand for the auction. 

The Pifer team says that area is known to be tight where very few farms ever get exposed to the market. Another of the enticements comes from the crop rotations in that region. Farms typically grow potatoes, sugar beets, wheat, corn, barley and soybeans. The ability to produce sugar beets and potatoes on medium to heavier loam soil, without irrigation, was a strong draw. 

Pifer says at $5.6 million, or $2.8 million per quarter, it breaks down to:

Parcel 1: $18,571 per FSA cropland acre
Parcel 2: $18,393 per FSA cropland acre

Jim Rothermich, vice president of Iowa Appraisal, calls this a bell ringer for the state of North Dakota. Looking at Iowa, he says land market conditions remain steady and strong, but aren't as hot as they were a year ago.

"Since peaking around May 2022, the market has declined a small percentage and is now pretty much in equilibrium, or flat," Rothermich explains. "Sales north of $20,000 per acre still happen but nothing like they did in 2022." 

While rising interest rates, higher input costs, drought and corn prices below $5 per bushel have put the brakes on the large increases between 2020 and 2022, cash rent auctions still yield solid numbers, he adds.

"I think market conditions will be stable for the next six months to a year," Rothermich says. "After that, lower farm income and rising interest rates will whittle down land prices. I do not think we'll see a double-digit decrease, but there is potential for a single-digit decline. Good quality cropland is still in demand."

When comparing 2023 to the hot markets of 2022, he says it's clear land values have cooled off.