RANCH AND RECREATIONAL MARKET – 2015
The recreational real estate market as well as the farm/ranch market continues to show a stable but increasing market when compared to 2014; most brokers would agree that the low point in the market was 2009 – 2010. Since that time several interesting trends have emerged:
- A general increase in sales volume and prices since that low period.
- In most cases recreational and farm/ranch prices are gradually increasing, but generally are still slightly below the highest prices in the 2006 – to early 2008 time period.
- Current buyers have the greatest interest in farm/ranch properties that will generate income to off-set ownership expenses.
- Commodity prices do influence land values when the subject properties have a significant agricultural component.
- Non-resort properties that offer only recreational value, do not generate the interest that they did prior to the recession.
- Inventory levels continue to drop, we see fewer high amenity properties on the market, as buyers in the recent past tend to hold their acquisitions for long periods of time, often 20+ years.
- Over-improved properties will sell, but the value of the improvements is generally discounted heavily by buyers.
- Land improvements associated with water, whether for agricultural or recreational purposes result in demonstrable increased values.
- Land encumbered by conservation easements is selling, often at prices that are surprisingly strong, the discounted amount for conservation easement encumbered properties seems to be decreasing.
- Access to adjacent public land is still an important criteria for most buyers.
- Proximity to a resort, airport or sizable town is becoming a more important criteria to buyers.
- Most sales are to individuals not corporate entities or investors who are looking for a short term investment or holding period.
- A potential change in interest rates generates less discussion in these markets than in the residential real estate market. A preponderance of recreational and farm/ranch purchases are cash transactions.
- Vacant land with no agricultural or limited potential represents the slowest segment of the recreational and farm/ranch real estate market.
Sales records from the Southwest Montana Multiple Listing Service (MLS) report that there were 32 farm/ranch sales in 2014 with a closed volume of just over 62 million dollars. This compares to 2015 where 14 completed transactions and 14 pending transactions show a volume close to 54 million dollars with the last quarter of 2015 remaining.
When comparing vacant land sales greater than 320 acres, the same MLS reports that in 2014, 12 land sales with a volume of almost 24 million dollars were completed, while in 2015 there have been a combination of 12 sales and pending sales totaling about 13 million, again with the last quarter of 2015 remaining. Days on Market (DOM) for vacant land have decreased from 516 days in 2014 to 233 days in 2015. The MLS also shows an increase in the median sold price.
It would appear that continued appreciation for recreational as well as farm/ranch properties will continue through 2016. Lack of inventory in most areas is becoming more of an issue for buyers.
If you would like specific information on a particular area within Montana, market trends or general observations on the ever changing real estate market in Montana, please contact one of the specialists in our Ranch and Recreational Division.