—Prices appreciating, but buyers can still find good values.
Property values in the Southwest continue to climb, despite rising
interest rates and challenging conditions for producers. According to
many real estate professionals in the region, sales have picked up after
a slowdown last summer. Properties in the Southwest region still
represent one of the best values available on the market. Lower than
average operating costs, combined with reasonable land costs, have made
the area a destination of choice for many ranchers who are looking to
take advantage of rising property values to expand or relocate their
According to Harley Hendricks of Harley Hendricks Realty in Marana, AZ,
the demand for ranches in the region is strong. “We are showing
properties four days a week right now,” he said, although according to
Hendricks, the type of ranch in demand has shifted from large deeded
parcels to properties which will run a good number of cows on mostly
leased land. He said the highest demand in recent months has been for
properties with small deeded parcels. “It used to be that a ranch with
2,000 deeded acres and 30,000-50,000 leased acres was the norm. Now, the
best demand is for ranches with small deeded acreage and large leased
allotments,” he said.
“I had a property listed which had a large Forest Service lease and only
50 deeded acres. That property generated the most interest and sold the
fastest of any listing lately,” Hendricks said.
He said inventory in the state was pretty good, with most offered
ranches tending toward the small side. “We need bigger ranches. There is
a good demand for the larger parcels, but there just aren’t very many
out there right now in this area.”
There are still good values to be found in the Southwest U.S. despite a
population boom. Hendricks said the region’s growth was understandably
attractive, particularly for producers in what he called “cold country.”
“Down here, cattle ranchers are amazed to hear that they won’t have to
put up any hay or feed any hay. It takes them awhile to believe it, but
once they do, they can’t believe how easy the living is down here,” he
Hendricks said ranchers from “cold country” are a driving factor in the
market right now.
Of course there is a trade off; carrying capacity in the Southwest is
greatly reduced from other parts of the country. Hendricks said in some
areas, properties might be able to maintain 16 cows per section. “In
others, it might be one cow per two sections. It just really depends on
the area and how much rainfall they get during the year,” he said.
According to him, the spring rains in 2005 were very good for producers
in the region and forage production was outstanding. So far this winter,
he said precipitation has been a little below normal, however, he
expects that it won’t take much to make this spring’s grazing season a
great one. That kind of optimism, along with the climate, has moved
Arizona to the top spot on the list of fastest growing U.S. states,
edging out neighboring Nevada which held that title in 2005.
“Arizona’s now the fastest growing U.S. state. There’s a lot of money
flowing in here from everywhere,” Hendricks said. “That means that a lot
of these ranches that used to be remote are now right on the outskirts
of a city. Instead of being three hours from a hardware store, now they
are just 45 minutes from one. That’s both good and bad.”
He said land in the state has been gaining in value, making it both a
good investment and an attractive buy for both ranchers and recreational
buyers alike. In fact, according to USDA data, in Arizona last year,
average agricultural land values rose 43.8 percent from 2005, reaching
an average of $3,350 per acre.
“There’s nothing less than $1,000 an acre in Arizona now. In fact,
deeded land is now closer to $10,000 to $20,000 an acre in the area
around us,” Hendricks said.
Even pasture value in the area is experiencing explosive increases.
According to the same USDA survey, pasture value rose 72.3 percent last
year, reaching $1,120 per acre. However, compared to some neighboring
states, that’s still a very good bargain. In California, pasture value
is nearly double Arizona’s rate at $2,160 per acre. In Utah, pasture
prices average $1,160 per acre.
New Mexico value
However, one of the best land values to be found anywhere in the country
exists in neighboring New Mexico. Tim Gipson, a broker with United
Country Professional Realty in Tularosa, NM, said the state,
particularly the portion he deals with, has been overlooked by buyers
searching for “trophy” ranches.
“The Sacramento Mountains in northeast New Mexico are often overlooked
by people looking for a high quality ranch property. People think of New
Mexico as mostly desert, but we have mountains, trees, water, and really
good quality mule deer and elk hunting. So buyers who are looking for
property for either ranching or hunting are able to find those kinds of
ranches here,” Gipson said.
Like many other parts of the country, inventory of ranch real estate in
New Mexico is in short supply, according to Gipson. That has led to a
very good sellers’ market for properties in the area.
“We are always looking for good quality listings in the mountains. It
seems like right now, there are a lot more buyers than there are
listings, and I always tell people, the higher the altitude, the higher
the price,” he said. “Because 85 percent of the region we work in is
government owned, there is a shortage of deeded land. The inholdings in
the forest are rare and they come at a higher price than land down on
the desert floor. If you can find a piece of deeded land in the
Sacramento Mountains for under $1,000 an acre, that’s a good price. Most
are closer to $2,000 to $3,000 an acre.”
According to Paul Taylor, a real estate agent based in Roswell, NM, land
in the state represents one of the best values available in the ranch
real estate market today.
“For us, 2006 was a strong sales year and we anticipate that the year
ahead will also be very good for both buyers and sellers in New Mexico,”
Taylor said. “Buyers from all over the country are taking advantage of
the property appreciation in their markets, selling and relocating to
New Mexico. Property values are rising here too, but it is still one of
the best values around.”
According to USDA, property values in New Mexico rose 44.4 percent from
2005 to 2006 to an average of $520 per acre. Property value for pasture
land saw an even bigger increase in valuation. Last year alone, prices
rose 60 percent, to average $400 per acre across the state. That was the
second highest percent jump in valuation in the U.S., second only to
“People from both Texas and Arizona have seen their property increase in
value and are taking advantage of that to purchase large tracts of land
here in southern New Mexico,” Taylor said.
He said that buyers in his particular market have a wide variety of
interests and are all looking for different attributes when considering
“There are a number of people looking for recreational properties. We
also see a large amount of 1031 exchange money. There are also a number
of investors and ranchers in the market for ranch land in southern New
Mexico. What makes a good piece of ranch real estate really varies,
depending on the buyer and what they intend to use it for,” Taylor said.
“However, the highest demand is for the large tracts of deeded land.”
According to him, there has been a limited supply of ranches meeting
that criteria available on the market in recent months.
“It seems like whenever one of those large deeded ranches comes on the
market, it’s sold very quickly. There is a lot of demand right now.”
According to Bill Bowen, president of Southwest Ranch and Farm Sales
located in McKinney, TX, the ranch real estate market in both Texas and
Oklahoma is also very strong. He said the majority of his market is
working cattle ranches, while 10 percent is in the form of hunting
“The east and southeast Oklahoma and northeast Texas region receives an
average of about 40 inches of rain a year,” Bowen said. “That makes for
a pretty good cow ranch. Down here, we are able to run one animal per
three to seven acres. When you compare that to any other area, I think
we probably have the best cost per animal unit of any area in the
He said the highest demand for ranches in the area is for those that
will run 200 to 1,500 head of cattle.
“About 90 percent of our clients are working on a 1031 exchange. We have
buyers from a lot of outside areas such as Arizona, Florida, California
and Nevada. We have had them from as far away as Oregon,” he said.
“Buyers in other areas are taking advantage of the rise in land prices
by selling out and moving down here where they can still find a good
working cattle ranch that is easy to operate.”
According to USDA, the average property values in Texas rose 24.3
percent between 2005 and the middle of 2006. Pasture value now averages
$1,080 per acre, according to the most recent report. Farm real estate
value is slightly higher, averaging $1,250 per acre, a 21.4 percent
increase over 2005. In Oklahoma, farm real estate values are slightly
lower, averaging $970 per acre, a 7.8 percent rise over 2005. Pasture
costs were $760 per acre in 2006, an 18.8 percent increase over 2005 in
the Sooner state, according to USDA.
Bowen said that much of the savings in operating costs is the result of
a low feed bill for producers in the area. While ranchers still have a
need to feed hay, the requirements are much lower than in other states
“The rule of thumb around here is one to two round bales per cow per
winter,” he said.
Despite normally good rainfall, stories of drought over the past two
years hurt the region slightly, according to Bowen. However, since early
fall, the area has received good rainfall and has recovered from the
“We have had good rains since fall and I think we ended the year about
six inches of rain below normal this year,” Bowen said. “The drought the
previous two years was the second worst in our history, but things have
recovered well and this year is looking better already.”
Bowen, who started his professional career as a cattle buyer and formed
Southwest Ranch and Farm Sales 21 years ago, said the strong market the
past several years has led to a shortage of listings in his area.
“We normally carry about 40 to 45 listings at any given time, but right
now, we are down to something like 25 properties in our inventory,” he
said. “Inventory is short, which is pretty much the case everywhere.
There is strong demand for good working ranches.” — John Robinson,