Bubble, or a peak into the future?

Iowa Farmland Surges 24% Versus Year Ago

Iowa farmland reached a record $8,296 an acre as of November 1, a rise of $1,588 an acre, or 23.7%, from 2011, according to the annual Iowa State University (ISU) Land Value Survey. This marks the third year in a row values have increased by more than 15%, says Dr. Mike Duffy, leader of the survey. For perspective, Iowa land values rose at a rate exceeding 30% a year for the consecutive years of 1973, 1974 and 1975. A 25% annual increase then followed in 1976.

The percentage increase is stronger than the 18% rise (October 2011 to September 2012 basis) reported by the Federal Reserve Bank of Chicago. The stronger percentage gain reported by the ISU survey reflects the powerful demand that swept across Iowa this fall.

Highest County: O’Brien with an estimated $12,862 average value. It also had the strongest percentage increase and highest dollar increase in values at 35.2% and $3,348, respectively. Surprisingly, nearby Osceola, Dickinson and Lyon counties also saw 35.2% increases each.

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I wonder about what kind of inflation is coming at us - something predictable or something uglier. We live in strange times, when official “cost of living” wage rates are zero or near so, but when other parts of our economy can undergo radical price increases.