Land Values Report Shows Increase for Key Midwest States

Every quarter, the Federal Reserve Bank of Chicago releases its findings on land values for the states of Iowa, Wisconsin, Illinois, Indiana, and Michigan. Its latest report released last week shows a modest increase of 3% in values for the area overall compared to the same time last year. This 3% gain matches the amount recorded in 2024.

The Bank sends out a survey to district agricultural bankers each quarter to measure the temperature of the farming economy. This latest compilation was based on information shared by 102 lenders.

Land Values Are Mixed Across States

A closer look at the data shows mixed results for each of the Midwest states in the district:

• Illinois, Indiana, and Wisconsin had a year-over-year increase in farmland values.

• Iowa had a year-over-year decrease.

• Michigan did not have enough responses from lenders to form an accurate reading of land values.

  
  

Quarterly changes (from July to October 2025) show slightly different results:

• Illinois saw increases from the 2nd to the 3rd quarter of 2025.

• Wisconsin saw a decrease from the 2nd to the 3rd quarter of 2025.

• Indiana and Iowa saw no change.

• Michigan again did not have enough lender responses for an accurate reading.

  
  

Credit Conditions

Agricultural credit conditions for the district softened further in the third quarter of 2025.

• Repayment rates for non–real estate farm loans were lower than earlier (for the eighth quarter in a row).

• Renewals and extensions of non–real estate agricultural loans were higher than a year ago (for the ninth quarter in a row).

• Demand for non–real estate farm loans strengthened in the third quarter of 2025 (for the eighth quarter in a row).

• The availability of funds for lending by agricultural banks was lower than a year ago (for the tenth quarter in a row).

  
  

Another notable finding this year involved how much farmers’ assets are required for loans. The Bank says collateral requirements for farm loans in the third quarter rose year over year.

RELATED: This longtime analyst explained to American Farmland Owner why he believes that more farmland will hit the market after farmers finish their harvest this year.

The Bank also reports that the average loan-to-deposit ratio declined to 76.9% in the third quarter of 2025. The gap between the average loan-to-deposit ratio and the average level desired by responding bankers narrowed from a year ago, with half of respondents stating that their banks were below their targeted levels.

Agricultural interest rates fell slightly during the third quarter of 2025. As of October 1, 2025, the district’s average nominal interest rates on new operating loans (7.47%), feeder cattle loans (7.57%), and farm real estate loans (6.82%) were at their lowest levels since the end of 2022.

Farmland Value Expectations for 4th Quarter

The survey also asks bankers for their expectations for the final quarter of the year. Here is how they responded:

• 63% of respondents expected district agricultural land values to be stable.

• 29% predicted a decline.

• 8% expected values to rise.

Softer demand by agricultural producers for farmland will likely extend into 2026. Net cash earnings (including government payments) for crop farmers were expected to be lower over the next three to six months compared to their levels of a year ago.

RELATED: Here is how declining farm income has a ripple effect.  

The regional report also provided new results from banks on what could be ahead:

• 71% of responding bankers forecast net cash earnings for cattle and hog farmers to increase over the next three to six months relative to a year ago.

• Forced sales or liquidations of farm assets owned by financially distressed farmers were expected to rise in the next three to six months compared with a year ago.

• Non–real estate loan volumes were forecast to be larger in the last three months of 2025 compared with the same period in 2024.

• Farm real estate loan volumes were forecast to be smaller in the final three months of 2025 compared with the same three months of a year earlier.