Land sales on the rise in Intermountain areas

Oct 12, 2012

According to USDA’s latest land values report, pasture values in the Northern Plains jumped 21.9 percent over the last year. In the Corn Belt, the increase averaged 8.6 percent. Within those regions some states were strong standouts, specifically South Dakota, which registered the biggest year-over-year increase at an average of 25.5 percent, taking per acre average pasture values to $590.

With the drought, grassland is becoming a hot commodity and large properties in the Intermountain area are also moving a little faster, according to real estate agents in the area.

Broker owner Mark Norem entered the ranch brokerage profession full time in 1989 and has established a market area including Montana, Wyoming, Idaho, North Dakota, South Dakota and Oregon. Norem said he’s seen an increase in buyers looking for larger properties, 10,000 acres and up.

Another positive, for those considering selling property, is the increase in land purchases by conservation groups. While this is still a touchy subject within many communities, the majority of property owners support private property rights.

“If you are in the market as a seller, and your property happens to be positioned within an area that the conservation groups have interest, you do have ready buyers,” Norem said.

While the conservation groups were once primarily interested in the mountain areas and rivers, Norem points out that, while that interest remains, they are now buying large blocks of prairie lands for conservation purposes.

While the conservation groups are buying up property, Norem said they are also seeing buyers looking for large acreage without attached leases. “We have buyers that want to get away from the federal permits,” he says.

“There has been a lot of dollars pulled up out of Texas and Oklahoma areas, into the Montana, Wyoming and Idaho areas,” Norem added. The 1031 Exchange rules are sending some of the oil and gas money north and now spreading Bakken dollars west into Montana and Wyoming. The Internal Revenue Code allows investors to sell one asset and then buy a replacement asset without having to pay any federal capital gains income taxes at the time of the sale.

West of Montana, in the Idaho and Washington area, John Knipe, president of Knipe Land Company, said property sales are the best they’ve seen in the last five years.

Knipe Land Company was first established in 1944 in Nampa, ID, and is one of the oldest real estate firms in operation today, specializing in farms and ranches, recreation property and timbered parcels of land in central and north Idaho, Oregon and Washington state. Knipe is also licensed in Montana and Nevada.

“We are seeing a stronger market than we’ve seen in a while,” Knipe says. Knipe gives some credit on the changes to less properties on the market, but he said they are seeing 22 percent of their properties selling within a year; a huge improvement he says over the past five years.

While Montana is seeing the influx of conservation purchases, Knipe said they aren’t seeing that in his key areas. “Most of our sales are ranchers, expanding,” he said. “Cattle prices are up, commodity prices are up, [ranchers] are going out and expanding.”

Knipe said the once popular hunt for the perfect recreational property has slowed, replaced by ranchers or commercial investors expanding their agricultural business.

In Sheridan, WY, John Chase, with Chase Brother’s Properties, said ranches are in high demand in his area.

“We have people calling us all the time,” he said. The problem is that there just aren’t lots of ranches for sale. The popular area Chase works in, primarily around Sheridan, but also up into Montana, is home to many long time ranchers who have no plans to sell any time soon. “There’s just not a lot of turnover,” Chase said.

“If a good [ranch property] comes on the market, it sells quick,” according to Chase.

While prices in Chase’s area tend to be higher, the people who are buying are there for the atmosphere. “People like the community—those that want to live here, are willing to pay the prices,” he added.

“People like the Sheridan lifestyle,” Chase says. He credits the “dude ranch” equation for some sales. “Those clients that have been coming here for generations, visiting the dude ranches, eventually someone from the family ends up moving here, in part, because of the community,” he said.

Despite the different areas, and different interests in purchases, there is one common denominator; land sales are (finally) on the rise again.

Through the first six months of this year, CoStar, Commercial Real Estate Information Company, has tracked nearly $11.9 billion in land sales compared to $9.9 billion for the same time last year—a 20 percent increase. Data collection for the third quarter is not yet completed, but already, year-to-date sales are well ahead of the first nine months of last year, the company says.

CoStar also confirms that more private investors are also upping their holdings in undeveloped land. According to the group, the 100 largest landowners have grown their investments 20 percent over the last five years.

The fall issue of The Land Report 100 reports that the total acreage owned by the 100 largest private landowners is up by 18.6 percent over the past five years, from 27.2 million acres in 2007 to 32.3 million in 2012.

“Look at farmland prices. Look at energy assets. Look at the rise in minerals and commodity prices. Each of these elements is tied to the land, which is why so many savvy investors are anchoring their portfolios with this asset,” said Eric O’Keefe, Land Report editor.

Big money continues to roll into all of the Intermountain areas. The Land Report lists John Malone, Liberty Media chairman and Atlanta Braves owner, as the nation’s largest private landowner, with 2.2 million acres of ranch and forest land in Wyoming, Nebraska, Colorado, New Mexico, New Hampshire and Maine.

According to the USDA report, those states with double-digit increases in pasture land values over the last year included: South Dakota 25.5 percent, Nebraska 24.5 percent, North Dakota 19.5 percent, Kansas 17.3 percent, Iowa 13.2 percent, New Mexico 12.9 percent, Illinois 10.7 percent and Oklahoma 10.6 percent. — Traci Eatherton, WLJ Editor