Written by John Stratman
At Mason & Morse Ranch Company, dba RANCH COMPANY, we cover a variety of market segments across the U.S. including farm, ranch, recreation & lifestyle properties. Our agents “Live It to Know It” and offer our clients more than 133 years of experience.
Market report – The national economy has continued to be strong. Concerns over softening corporate earnings, effects of increasing tariffs and rising interest rates have not derailed the stock market rally and most segments in the rural real estate market have been stable.
Trends in the 2019 real estate markets have continued to be stable from the prior year. Buyers continue to be very discerning over valuations and selective in their purchases. Tax deferred exchanges continue to be a relevant factor for the lower and mid-range points in the market, although cash buyers in the higher price market segment continue to outweigh buyers seeking financing. Areas with proximity to population centers continue to have the most activity. Properties with quality, location and appropriate pricing continue to sell readily.
Agricultural Farm and Ranch
The agriculture based real estate property valuations have continue to soften due to commodity prices. Ranch property sales have been slower as cost of production and lower calf prices have impacted the demand. Farm values continue to be soft due to cost of production and commodity prices. The potential for trade agreements in the Asia-Pacific countries has created some buyer interest for quality farms.
We expect values to remain stable with any near-term upside limited to increases in commodity prices.
A change in commodity prices and hence a change in land values will be influenced by U.S. and foreign relationships and the value of the US Dollar. Generally, inventory is limited for good to excellent quality farm and ranch lands and the market absorbs appropriately priced new listings well.
Recreation and Lifestyle
Recreational luxury property sales have continued to be soft, but prices have softened in the lower end and the upper end is driven by quality and appropriate pricing. We continue to see over pricing in new listings but those with quality and location continue to have interest from buyers.
We expect 2020 to be a slower year than 2019 due to this being an election year and investors watch for changes in the administration which could change their investment direction. Limited inventory of larger properties will continue to maintain strong prices in this market. Pricing on mid-range inventory will be determined by accurate valuations by sellers in order to attract buyers.
Working ranch prices will be directed by the outlook for the calf and meat markets. Aside from the effect of the trade tariffs, we are cautiously optimistic that we will see some improvement as cattle numbers have flattened out and prices for most classes of livestock have begun to improve. As has been the case, beef exports and the valuation of the US $ will impact the direction of ranch sales and valuations. We do not expect major changes but cautiously optimistic for general improvement.
Farmland values are likely to continue to be flat, however, trade talks and the decline in commodity carryover inventory could begin an upturn in prices. We continue to expect the better farms to hold their value. Areas with specialty or perishable crops such as vegetables, nuts and tree fruit are seeing continued upward prices, especially in light of demand form the myriad of investment funds seeking agricultural assets. There is, however, still strong interest from large and small investors as well as family farm operators for market priced farmland. This should continue as long as interest rates do not rise much further.
Recreation and lifestyle properties include several sub-categories including hunting and fishing properties, equestrian properties and rural lifestyle and estate properties. Hunting and fishing properties have continued to be slow to sell as buyers remain cautious about future economic conditions and buyers find it difficult to deal with some the valuations. Hunting & fishing properties will continue to be driven by quality and the strength of the US economy will keep this sector active for properties appropriately priced. Equestrian properties that are well located will continue to have active interest. We continue to note that “niche” markets for recreation and lifestyle properties will see varying results, due to geographic considerations, lifestyle choices, proximity to amenities such as outdoor recreation, equestrian events, quality of hunting, live water, proximity to population centers and the economy. These factors, along with the 2020 election results will influence the valuation trend of recreation and lifestyle properties.
Overall, we are optimistic about the markets we serve as available inventory and value based pricing continue to dominate the market place. The Ranch Company (www.ranchland.com) personnel are available to consult with you about valuations and assist you with your real estate buying and selling needs across the U.S.
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