After a quiet 2009 in ranch sales, several market segments are showing improving signs.Â Many buyers who sat on the fence for the last couple years (initially because many believed prices were too high and then waiting to see where prices stabilized) are now showing interest. Some of these buyers are acquiring properties adjacent to current holdings since buyers and sellers are now more likely to agree on pricing. In other cases, some buyers are buying ranches in other states or new market regions.
There are a number of sellers who have been forced to sell properties because of problems in other areas of their investment portfolios. Banks that will not extend lines of credit for operating businesses have created liquidity crunches that have caused some owners to liquidate ranch and recreational holdings creating acquisition opportunities for buyers wanting to take advantage of cyclical discount buying.
Agricultural production land is in demand due to the cash flow and prospective inflation hedge. Many investors, in these uncertain times, are focusing on the basics. People have to eat and agricultural commodities are projected to provide a stable return and increase in price at, or above, real rates of inflation. In addition, an increase in prosperity of developing countries is raising per capita protein consumption that bodes well for ranch products in the U.S. market.
A common buyer phenomenon involves individuals whose stock portfolios have recovered some and now they want to pull money out of the stock market and redeploy it in a safe, less volatile investment class. These are the buyers who may have always wanted to own ranch or recreational property and figure, “Why not now?” Prices are attractive, the selection of available properties has expanded and farm loan rates are at an all time low. The value of a family refuge and the joy of getting back to basics with a lifestyle component cannot be underestimated.