Recreational and Agricultural Property Investors Market Snapshot
After discussing the ranch market with Fay Ranches brokers in our 10 offices spread across 5 states, I can confirm the following information accurately represents the market. The value of purely recreational ranches has corrected more dramatically than ranches that have agricultural income whose value is entirely or in part commodity driven. Both asset types have stabilized: the income-producing ranches have begun to rebound and the recreational ranches are poised to rebound.
There is an increase in buyers trickling back into the market. Fay Ranches closed more ranch transactions in 2011 than in any previous year in the history of the company. We see a recognition of value in the market by experienced buyers. All these factors point to an excellent time to invest and enjoy both recreational and income-producing ranches.
-Greg Fay
Fay Ranches is pleased to post excerpts from market updates related to ranch/agriculture and land. These reports are provided courtesy of Scott Pogh, VP of Agribusiness, Northwest Farm Credit Services.
Investors Market Snapshot December 31, 2011 - Last quarter, the Investor Snapshot reported recreational real estate sales considerably below previous years. This quarter the Snapshot substantiates this premise with data from Northwest FCS’ Appraisal Services database. The graph below summarizes property sales of 200 acres or more with sales prices greater than $2 million. The graph spans ten years and includes over 1,000 sales split nearly even between recreational and agricultural sales.
Lower recreational property values are primarily due to lower demand and fewer high end recreational properties selling. Owners of the high end properties pulled them off the market rather than discount them. A weak housing market, unstable financial system, and general uncertainty squelched potential buyers’ interest. At the same time, rising commodity prices and interest in stable, tangible returns fueled demand for (and prices of) agricultural real estate. Agricultural real estate buyers viewed cash flows and potential profits from future farmland sales favorably compared to stock market volatility.
Outlook
Recreational property prices are expected to be flat during the first quarter of 2012, pressured by uncertainty in world markets and restrained investor demand. However, improving economic indicators should improve investors’ demand and increase the spread between recreational and agricultural properties. In the meantime, the spread between recreational and agricultural properties is expected to be narrow for all but high-end, premium recreational ranches.
About Northwest Farm Credit Services
Northwest Farm Credit Services prides themselves as the place where premier rural properties and expertise in lending come together. If you are looking for financing on a premier rural property in the Northwest, you’ve likely found that few lenders have the expertise, willingness, competitive products and resources to adequately service this type of loan. For more information on Northwest Farm Credit Services, visit the Farm Credit website, or contact Scott Pogh at 406-556-7318.
About Fay Ranches
Fay Ranches brokers the finest Montana ranches and sporting properties for sale. Contact us today to make an investment that will enrich your life in many ways.
