Agricultural land values have gradually increased since 1987, rising to the current average of $1,050 per acre. The price increases are driven by several factors, such as higher farm incomes, low interest rates, rural amenity values, and urban proximity. However, Charles Gilliland of the Texas A&M University says, "The delinking of agricultural income and land prices started a long time ago. Ranchers still buy land but they are in competition with recreational users, who have been driving prices for some time." From billionaires looking for a place away from it all to people genuinely interested in farming and animal husbandry, the demographics and motivations of ranch buying have evolved over the years.
Billionaires Selling And Buying Ranches
The top 100 landowners control most of America's ranches. In Texas, 96% of the land is in private hands. Hence, for those investing in ranch land, buying and selling takes place on the open market. Says ranch real estate specialist Sam Middleton, "Typically, the large and historic ranches only become available after a death in the family. Most of these ranches have been owned and operated for several generations, but with the expansion of the family ownership members, the new generation often does not have the sentimental attachment and pride of ownership of earlier generations. At that point, it often becomes easier for the family members to elect to sell the property and divide the proceeds rather than to continue on with management of the large asset."
On the other hand, billionaires also dominate the luxury real estate market, buying up ranches that are viewed as the 'ultimate social distancing retreat'. The value of a remote getaway has become a coveted prize. According to the Land Report, "Productive cattle ranches and upscale recreational properties continue to trade at the levels they were listed at." The luxury trend gained momentum as schools started with real estate markets booming for multimillion properties that provide quiet access to nature and a sense of safety.
Speculative Buying
Currently, real estate brokers are experiencing a high demand for ranches in the states of Idaho, Washington, Montana, and Wyoming. The current health crisis is one of the possible factors in the spike of ranch sales in the US West, according to real industry professionals. Jim Taylor of Hall and Hall says that purchasing a ranch is not always an attractive investment because the rate of return can be low. However, he says that "People look at them [ranches] as an investment even though the ranching business isn't good."
Industry experts also think that buyers believe rural areas are safer for protecting their health. Other people who already intended to invest in property did it earlier than planned due to the health crisis. Moreover, with the possibility to work from home as an accepted norm, reducing presence in the office or travel to business meetings, people can spend more time on their ranches.
Ranch buying has picked up this year, extending the range of people who are interested in investing in expensive properties. There are billionaires and rich individuals who are looking for a haven during challenging times, while buyers who are speculating are searching for ways to expand their portfolios with the typical motivation of earning income.
* This is a contributed article and this content does not necessarily represent the views of realtytoday.com
