What Climbing Farmland Values Means for Rural America

U.S. farm real estate values increased an average of 4.3 percent over the past year, with the national average value hitting $4,350 per acre. 

As U.S. farmland values continue their multi-year climb, they carry a range of implications and signals for landowners and operators. On the one hand, rising values create equity gains and leverage for established owners, helping them invest in their operations, tap into retirement savings, or both. For those who hope to buy land in the coming years, it raises the stakes for making competitive offers and finding financing. 

The USDA’s annual farm real estate survey provides a benchmark on three land classes: cropland, pastureland, and an overall average that combines both of those and farm buildings. In all three, 2025 values increased. Cropland averaged $5,830 per acre nationally, a 4.7 percent rise over 2024, and pastureland increased 4.9 percent to $1,920 per acre.

The states of the Corn Belt again led the nation in average values, with Iowa alone topping $10,000 per acre for cropland. The Northern Plains states also saw some of the largest percentage increases, reflecting tight supplies, active operators looking to expand, and high commodity prices. 

The Northeast continued to run near the bottom in values and percentage change, but in some cases, this is due to a growing mix of non-ag buyers, such as conservation organizations, energy developers, and recreational land investors, bidding up land prices.

Smaller and less productive farm regions, particularly those near urban growth markets, have also seen upticks in values driven by urban sprawl and local infrastructure projects. Proximity to a new highway, airport, or industrial park can mean an extra few hundred or even thousand dollars per acre on the appraisal, even if the land will not support increased agricultural production.

A mix of overlapping factors are driving the increases in land values. The profit margins on much U.S. agriculture are supported by a decade-plus of relatively high commodity prices, fueling strong demand for the land where they are grown. At the same time, supplies of farmland for sale are limited in much of the country, especially where larger operators are looking to increase contiguous acreage.

Interest rates have also been a factor. Low rates in the past decade incentivized borrowing for land purchases, and even after recent rate hikes, many land sales are still being financed with cash balances built up during more favorable years. Meanwhile, large institutional investors and non-farming buyers continue to see agriculture as a stable inflation hedge, keeping more bidders in the marketplace for farmland. Emerging land uses like solar and wind, where they are permitted, are also bidding up values in many regions.

For existing landowners, higher land values are good news in many respects. As equity on the balance sheet, it can help landowners secure better terms on bank loans for equipment, inputs, and other capital expenses. Lenders tend to view high land equity as stability, and in competitive credit markets, that can mean lower interest rates and more loan power for those who need it.

It also opens the option to sell high while the market is in their favor. A comfortable retirement sale, especially to an heir or non-family successor who has already worked the land, can often fetch top-dollar and bring closure to the current landowners as well as meeting the retirement goals of the farmer and their spouse. 

In other cases, owners are using the current environment to restructure ownership by selling to other relatives on favorable terms, turning part of a family farm into multiple smaller successor operations.

With leasing, higher land values are also an advantage. Cash rents can often be driven higher, especially in areas with above-average productivity, and while this may feel more like a flip of the coin than an advantage, in many cases, strong leasing rates can lead to higher income security for landowners while retaining flexibility for operations. An increase in ownership gives greater tax advantages and control over the land, but a long-term lease with predictable returns can also be a windfall and income source for generations to come.

If landowners have tied up some of their ground with permanent conservation easements, the rise in valuation also bodes well for their program returns. Land is commonly appraised based on soil type and zoning at the time of the easement agreement, with landowners compensated for the loss of that value based on a percentage of the appraisal. 

Higher appraisals in the current environment can mean higher payments on those agreements. Likewise, those using government programs to set-aside wetlands, grasslands, or wildlife habitat could find that those land uses now represent more competitive sources of income alongside their environmental goals.

Higher land prices also bring some headwinds for some groups, especially those who are entering farming for the first time. The cost of breaking into a career or buying out a family member has never been higher, and in some states, even modest plots of land are out of reach on a first-generation farmer’s operating budget alone. In some cases, this has forced new and beginning farmers into leasing deals that limit their equity growth and ability to expand.

In many states, rising land values also mean rising property taxes for landowners. In states that use the market-value approach, rapid land appreciation can translate into sharp tax increases. Cash-strapped operations that are already behind on input bills and equipment purchases can be surprised by a few extra dollars per acre in taxes that quickly become an albatross.

Finally, higher values can become a temptation to overleverage. When land is worth more, it’s easier to borrow against that equity, and farm operators may be tempted to use short-term farm profits to fuel longer-term expansion. In a year with lower commodity prices or in the face of rapidly rising interest rates, those debts can become onerous. U.S. farmland values have fallen before, and while few market watchers will say when that might happen again, it’s a cautionary factor worth considering for operators today.

For landowners and operators, today’s farmland value environment calls for a disciplined strategy. In considering a purchase, owners should do a full run of numbers on anticipated returns. Land is a long-term investment, and while farmland appreciation is desirable, it will not always come when an owner needs it to cover shortfalls. Stress-testing a purchase against a down year in the market or a higher interest rate environment can also be a sobering exercise in discipline.

If selling is on the table, good timing can mean a big difference on what an owner gets. Having a professional appraisal done is a good starting point for understanding value, as is watching for months or years to see if the market appears to be topping out or continuing to rise. Sellers with time flexibility may want to wait for more data if the numbers suggest an upward trajectory in the local market, but those who need liquidity for operational reasons may find that today’s high values provide the best security.

For family and multi-generation operations, succession planning is always important, and rising land values mean planning that must be both clear in terms of equity but also family relationships. Valuation disputes are a common cause of successor disagreement, and operators need to have a clear buy-out and retirement agreement with successors in order to have both the farm and the family come out whole after a transition.

Planning leasing can also remain a sound strategy for expansion when a purchase is not possible, given current market valuations. Leases can be both more flexible and less capital-intensive than ownership, allowing owners and operators to adjust more quickly to changing market conditions while retaining capital for other investments. In higher-value areas, long-term leases can also provide the security of knowing that productive land will be retained for family farm operations.