FORTUNE – Following the collapse of U.S. home prices in 2007, analysts and economists have been eager to spot the next big bubble. There's been talk of a bond bubble. And as U.S. stocks hover near a five-year high, many have wondered if a bubble is in the works. There have also been worries over the market for student loans in which defaults have recently risen.
Then there's apparently a new bubble that few have ever heard about: America's farmlands.
Thanks to higher crop prices, the costs for farmland nationwide have risen rapidly, particularly across the Midwest's Corn Belt. Demand for corn soared as the use of ethanol in the U.S. and abroad has risen. Because higher prices for crops means farmers could make more on their land, many are using their growing profits to buy more land. Investment firms have caught on -- they're buying too.
The Kansas City Federal Reserve said irrigated cropland in its district rose 30% in 2012, while the Chicago Fed reported a 16% increase. And despite the drought in Iowa last year, farmland prices have nearly doubled since 2009 to an average of $8,296 an acre. Prices in Nebraska have also doubled during the same period.
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Analysts and economists have quietly warned of a bubble in farmland since 2011. The latest comes this week -- a group of bankers advising the Federal Reserve warned prices aren't justified and have entered bubble territory, according to records obtained by Bloomberg of meetings of the Federal Advisory Council. As investors shy away from bond markets and search for bigger returns, members say they've opted for farmland. They blame the central bank's super-low interest rate policies.
"Agricultural land prices are veering further from what makes sense," according to minutes of the Feb. 8 gathering of the Federal Advisory Council. "Members believe the run-up in agriculture land prices is a bubble resulting from persistently low interest rates."
True there's some bubbly behavior going on, but that doesn't mean the market for farmlands has entered bubble territory, at least according to Yale University economist Robert Shiller, who first warned of a housing bubble back in 2003.
The most obvious sign: Nobody has ever really heard about it.
Even if prices went belly up, it likely won't cause nearly the kind of financial havoc that sub-prime loans did onto the housing market and the nation's financial system. As Shiller wrote in 2011 in Project Syndicate, an online opinion forum featuring leading economists., the market for farmlands isn't nearly as big as the housing market or stock market, for that matter. Whereas farmland had a total value of $1.8 trillion in 2010, the U.S. stock market's value was $16.5 trillion, and the housing market was $16.6 trillion.
Plus farmland bubbles are rare, he adds. While prices in the Midwest declined dramatically in the 1980s, Shiller notes that there has only been one farmland bubble in the U.S. during the 20th century, when there was a fear of overpopulation in the 1970s.
True, farmland prices could fall if interest rates rise and if crop prices decline in big ways, making it difficult for farmers to repay loans. But unlike America's latest housing market bubble, which saw the supply of new homes rise rapidly as investors banked on new mortgages, there is no increase in the supply of farmland.
Admittedly it's hard to say if there is indeed a bubble, and if so, when might it pop. Corn futures have been on a steady decline for the past nine months. Nonetheless, there are plenty of reasons why farmland is still the "bubble" many have never heard of.
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