Iowa land value as high as an elephant's eye

DOWS, Iowa - Since the real estate bubble burst, home values are down 32 percent, but farm real estate is soaring in the struggling market; between 2007 and 2010, it jumped 17 percent.

It's a land boom right here in Iowa, CBS News correspondent Barry Petersen reports.

Iowa farmland prices leap, but not job market

Here in Dows, population not quite 550, on a recent chilly morning it seemed half the town was packed into the local community center.

The occasion was a land auction.

Presiding, a man who calls himself "the dirt dealer."

"When farmers make money, they buy one of two things, usually, iron or dirt," said Jeff Obrecht. "I sell both."

For 30 years, Obrecht has been in the farm equipment and land business, and business is booming.

"There's been no better time in our history to sell a farm than today," Obrecht said.

While real estate values continue to fall in much of America, values for farmland soared here 32 percent in 2011, the biggest gain ever.

The upsurge is driven, the dirt dealer said, by the perfect storm of low interest rates and the high price of corn, thanks to strong exports and the increasing need for corn to make ethanol.

The more productive the soil, the more it's worth, and at an average price of $6,700 an acre, it's worth a lot.

"Black gold is what you're holding in your hand," said Obrecht. "It's not oil; it's dirt, and you can get rich off of it."

The Oleson family owned the 148 acres that was up for auction. The family originally bought the farm for just more than $13,000 in 1936. Today, they were hoping it would sell for well over a million. Obrecht knew of three serious bidders.

Bidding was competitive, and the price quickly went north of $10,000 an acre.

The total sales price was more than one-and-half million dollars.

Despite the chances at these riches, most farmers buy land for life and don't like to sell.

State laws help keep speculators out of the market, and there are only so many acres of "black gold" in Iowa, one more reason sky-high prices probably won't see a sunset anytime soon.