A Year of Opportunity: Winter Real Estate Market Report

At Mason & Morse Ranch Company we cover a variety of market segments including farm, ranch and recreation/lifestyle properties. While, 2016 was a mixed year for most of the real estate markets as the uncertainty of a strained world economy, weak commodity prices and the presidential election caused buyers and investors to hold up on buying decisions, we expect 2017 will provide direction for most of the rural real estate markets. The new administration is expected to reduce taxes and regulations and provide greater profit opportunity and optimism for capital ventures. While markets for major commodities remain at the bottom of the long term cycle, they do provide buyers with the opportunity to invest at a lower cost basis in the land markets and generally these time periods turn out to be the best time to purchase. Generally, inventory has increased, however, the inventory for the very good to excellent quality farm and ranch lands remains tight. The inventory of marginal rural property continues to increase. More strict credit agricultural lending guidelines will cause some land owners to sell land to restructure balance sheets allowing some new inventory. The demand from buyers remains fairly strong for their desired investment criteria which mean that prices will remain strong for the very best lands and noticeably weaker for lower quality operations.  We expect 2017 will be a year of opportunity for agricultural buyers and those sellers will need to be aggressive. Recreation lands and lifestyle properties continue to show an increase in inventory generally, however, the prices have shown that the high quality hunting and fishing properties still command a stronger valuation while the price for marginal quality properties shows either lower prices or a lack of buyer demand.   

Taking a closer look at specific markets, we observed the following trends:

Working ranch and grassland prices have declined through 2016 as cattle prices remained declined into the fall runs. Ranch prices on all but the very best ranch  properties are soft and inventory continues to increase and price reductions are seen more and more on active listings. We have seen a decline on sold prices in a number of the larger grassland areas. The good news is that there remains plenty of buyer interest at the right price, so we do not expect any significant decline in valuations overall.

Recreation and lifestyle properties including horse properties have been slow. There remains a good selection of inventory and sellers have held strong on prices. It should be noted that some of the geographic areas for these “niche” markets are seeing varying results, for example, large population areas see stronger activity in part due to their strong residential markets and low interest rates. The recreation and lifestyle markets have been slow to improve. The improved stability in the political and business sectors due to the new presidential administration and more favorable business climate, should result in more buyer confidence for this market segment. There seems to be adequate inventory and capital demand will require Sellers to be realistic and aggressive.

Farmland values have declined over the last 12 months as commodity prices for grains have continued to decline. At this point, we have substantial inventories of grain and until we see either 1) a decline in the valuation of the dollar compared to the currencies of our export markets or 2) a supply interruption, typically drought induced, in a major grain growing area of the world, we expect grain prices to remain soft.  We feel the direction of commodity prices will largely determine the value of farmland for the time being.  The best farms in terms of soil and water characteristics will command the greatest demand and lesser price concessions.    

Overall, we expect 2017 to be more active year with stronger buyer interest, steady to lower prices and adequate to increasing inventories. Demand from buyers will be driven by income consideration and value. The lack of other investment opportunities will keep Buyer demand strong, but discerning. Sellers have few reinvestment opportunities and it seems some sellers will only sell if they find a replacement property, making many transactions subject to 1031 exchange requirements. Inflationary pressures have not surfaced and while that factor could change the markets rather quickly, we have not yet seen those signs as the Federal Reserve has only marginally increased interest rates.

At Mason & Morse Ranch Company we are active in representing both buyers and sellers across much of the United States. We have well qualified agents that are experts in their fields and they are prepared to assist you with your real estate buying and selling needs.

A Year of Opportunity: Winter Real Estate Market Report

  • January 23, 2017
  • All Farm & Ranch News

At Mason & Morse Ranch Company we cover a variety of market segments including farm, ranch and recreation/lifestyle properties. While, 2016 was a mixed year for most of the real estate markets as the uncertainty of a strained world economy, weak commodity prices and the presidential election caused buyers and investors to hold up on buying decisions, we expect 2017 will provide direction for most of the rural real estate markets. The new administration is expected to reduce taxes and regulations and provide greater profit opportunity and optimism for capital ventures. While markets for major commodities remain at the bottom of the long term cycle, they do provide buyers with the opportunity to invest at a lower cost basis in the land markets and generally these time periods turn out to be the best time to purchase. Generally, inventory has increased, however, the inventory for the very good to excellent quality farm and ranch lands remains tight. The inventory of marginal rural property continues to increase. More strict credit agricultural lending guidelines will cause some land owners to sell land to restructure balance sheets allowing some new inventory. The demand from buyers remains fairly strong for their desired investment criteria which mean that prices will remain strong for the very best lands and noticeably weaker for lower quality operations.  We expect 2017 will be a year of opportunity for agricultural buyers and those sellers will need to be aggressive. Recreation lands and lifestyle properties continue to show an increase in inventory generally, however, the prices have shown that the high quality hunting and fishing properties still command a stronger valuation while the price for marginal quality properties shows either lower prices or a lack of buyer demand.   

Taking a closer look at specific markets, we observed the following trends:

Working ranch and grassland prices have declined through 2016 as cattle prices remained declined into the fall runs. Ranch prices on all but the very best ranch  properties are soft and inventory continues to increase and price reductions are seen more and more on active listings. We have seen a decline on sold prices in a number of the larger grassland areas. The good news is that there remains plenty of buyer interest at the right price, so we do not expect any significant decline in valuations overall.

Recreation and lifestyle properties including horse properties have been slow. There remains a good selection of inventory and sellers have held strong on prices. It should be noted that some of the geographic areas for these “niche” markets are seeing varying results, for example, large population areas see stronger activity in part due to their strong residential markets and low interest rates. The recreation and lifestyle markets have been slow to improve. The improved stability in the political and business sectors due to the new presidential administration and more favorable business climate, should result in more buyer confidence for this market segment. There seems to be adequate inventory and capital demand will require Sellers to be realistic and aggressive.

Farmland values have declined over the last 12 months as commodity prices for grains have continued to decline. At this point, we have substantial inventories of grain and until we see either 1) a decline in the valuation of the dollar compared to the currencies of our export markets or 2) a supply interruption, typically drought induced, in a major grain growing area of the world, we expect grain prices to remain soft.  We feel the direction of commodity prices will largely determine the value of farmland for the time being.  The best farms in terms of soil and water characteristics will command the greatest demand and lesser price concessions.    

Overall, we expect 2017 to be more active year with stronger buyer interest, steady to lower prices and adequate to increasing inventories. Demand from buyers will be driven by income consideration and value. The lack of other investment opportunities will keep Buyer demand strong, but discerning. Sellers have few reinvestment opportunities and it seems some sellers will only sell if they find a replacement property, making many transactions subject to 1031 exchange requirements. Inflationary pressures have not surfaced and while that factor could change the markets rather quickly, we have not yet seen those signs as the Federal Reserve has only marginally increased interest rates.

At Mason & Morse Ranch Company we are active in representing both buyers and sellers across much of the United States. We have well qualified agents that are experts in their fields and they are prepared to assist you with your real estate buying and selling needs.