It seems the coronavirus pandemic has not put a damper on the real estate market in the Intermountain region. Reflecting a nationwide trend, real estate brokers who spoke with WLJ stated there is a demand for a number of different purposes, from people living in urban areas looking for open space and recreation opportunities, ranchers expanding their operations, or those wanting water rights for irrigation or municipalities.
Property inventories have also been low, with listing times for farms and ranches shorter than pre-pandemic. Interest rates are their lowest in several years, which makes the market more attractive.
“When COVID first hit, our phones were dead quiet for the first two weeks,” Ryan Hostetler of AGPROfessionals in Greeley, CO, told WLJ. “Everybody’s buying and selling right now. I think with rural and residential, the interest rates have helped. I think folks want to get out in the country and get a little elbow room.”
According to the USDA’s National Agricultural Statistics Service latest Land Values report published in August, farm real estate value—a measurement of the value of all land and buildings on farms—nationwide has remained unchanged from last year, averaging $3,160 per acre. Crop and pastureland values also remained unchanged from the previous year with values at $4,100 and $1,400 per acre, respectively.
Across the Intermountain region, farm real estate values have risen 8.77 percent over the past five years, with the average price of $1,240 per acre as of 2020. Prices have increased on par with other regions in the United States since 2019, with the Intermountain region rising 1.6 percent.
Idaho continues to lead the region in increased value, rising 3.7 percent and averaging $3,110 per acre. The average per-acre and percent increase over 2019 for the Intermountain region was as follows:
• Colorado—$1,590 (+1.3 percent)
• Idaho—$3,110 (+3.7 percent)
• Montana—$915 (unchanged)
• Nevada—$1,000 (-2.0 percent)
• Utah—$2,450 (+1.2 percent)
• Wyoming —$750 (+1.4 percent)
Pastureland values saw a modest gain of 0.6 percent over 2019, with most states in the region experiencing little to no increase in values. Idaho was again the region leader, with prices increasing 3.2 percent and prices the highest per acre in the region at $1,610.
As with 2019, the state continues to lead the region for increases in real estate prices and pastureland. Mark Brown of Pioneer Associates Real Estate in Ketchum, ID, said he is selling a mixture of every type of property from the working ranches to lately a large majority of recreational properties.
“The recreational ranch market has really picked here in the last six months,” Brown told WLJ. “Up until COVID, they were just kind of chugging along, and once people realized they needed to get out in the hinterlands, they came up here.”
Brown was alluding to having more buyers coming from Western states and urban areas who want a property on the river with mountain views and are not interested in “making a dime” on the property or are conducive to having a working ranch. Since May, these properties, which would typically be on the market for quite a long time, are selling quickly. While some people may not be interested in making money on recreational properties, Brown said some people are buying ranches as investments and leasing the property to farmers and ranchers.
Brown said the pandemic did not change the market for large working ranches, and the market is mostly made up of ranchers intending to expand their operations.
“It keeps on moving, and if it pencils out, they have good grazing allotments, and they’ve got good water, you’re seeing those ranches sell,” said Brown.
Brown also pointed out the residential market for Boise, Ketchum and Coeur d’Alene are also selling at a rapid pace.
Despite the Land Values report showing a decline in the state, Paul Bottari of Bottari and Associates in Wells, NV, said he has not seen a decrease in the northeastern part of the state and speculates it could be in the southern part or in the Reno/Garnerville area where prices were already high.
Whether COVID has impacted the market in the area, Bottari stated the market has improved with smaller deals “because we have more people out of California and the other big cities wanting to get away.”
He also noted that some properties are listing or selling for prices higher than their appraised value.
“We have short supply and short inventory, so it has a tendency to produce some higher list prices. In the last eight months, I have closed three deals on ranch/farm properties, and they [buyers wanting to get away] have access to more money than local buyers.”
Bottari also noted some buyers are looking for an investment opportunity, wishing to realize a net return on an annual basis of 5 percent. However, those opportunities are not as common and generally entail ranches that garner higher prices, he said.
The mitigation measures protecting the sage grouse population and habitat in Nevada have also impacted the real estate market. Companies buy conservation easements in exchange to continue their operations, and Bottari noted mining companies are buying agriculture properties as well.
Bottari said he spoke with another broker in the state, and they see slower movement on the larger ranches as there are a smaller number of potential buyers, but there is strong demand for smaller ranches.
John Pearson of Pearson Real Estate Co., Inc. in Buffalo, WY, told WLJ buyers are looking to expand their operations with a majority of the purchasers coming from within the region and looking for lower overhead costs. Pearson expounded that the state is “very amenable” for many buyers, with lower land prices and favorable taxes.
According to the Tax Foundation, Wyoming ranks first for the State Business Tax Climate Index in 2020. This ranking considers the impact on businesses with the rate of corporate taxes, individual income taxes, sales taxes, unemployment insurance taxes, and taxes on property (residential and commercial). The state has no income tax and very low property taxes. A 140-acre property just sold by Pearson showed the real estate tax was $893 last year.
Pearson thinks the 1.4 percent increase in land values in the state is a conservative estimate and has seen 3 to 4 percent gains since last year.
While also licensed in Montana, Pearson stated most of his transactions occur in the central and eastern part of Wyoming with properties including deeded acreage and acreage from the state and Bureau of Land Management (BLM).
An excellent example is the Big Sandy River Ranch, which has been in the family for 100 years. The ranch includes 9,613 deeded acres as well as 20,273 acres of state of Wyoming leases, 32,749 acres with U.S. Forest Service permits and 981,931 acres with BLM permits for a total of 1,044,566 acres. According to the listing, the ranch is listed with a carrying capacity of 2,800 animal units, running approximately 1,200 mother cows, 800 yearlings, and 8,000 ewes and a small herd of goats. The ranch is for sale at $19.5 million and real estate taxes for 2019 were $8,587.
With the entire state experiencing drought and half experiencing extreme drought, water rights are the driving factor for land purchases.
“We’re seeing a high demand for irrigated farms from municipalities, developers and folks looking to expand their operation,” said Hostetler.
Hostetler said the city of Greeley and other municipalities are looking to buy farmland for the water rights and leasing the land to farmers and ranchers, sending most of the water to their city for their needs.
Hostetler indicated the county has a “right to farm” law, but the state has three different estate rights: mineral; surface; and water. The water rights can be split off from the property. Hence, large municipalities in the area such as Aurora, Thornton, and Denver acquire properties as their populations grow.
“We try to keep land in agriculture as long as we can, so we try to peddle it to local farmers,” said Hostetler. “We’re not big fans of the buy and dry mentality. We appreciate agriculture in this area and know that’s what this area was built upon.”
Unlike other states, Hostetler sells mostly smaller property pieces of a quarter section (160 acres) to a half section. The properties with good water rights in Weld County have seen prices increase from 15 to 30 percent, well above the 1.3 percent cited in the Land Values report.
Despite the rise in demand, brokers told WLJ there are still opportunities, and this is an excellent time to buy and sell farms and ranches. Pearson stated interest rates have made buying attractive, enabling buyers to buy a little more property than they usually would. — Charles Wallace, WLJ editor