Agricultural farm land and ranch property in Idaho has gained value in the past several years and is still experiencing an investment boom.
Investing in land has always been a fairly safe way to preserve or grow principle, but with the feds keeping interest rates low year over year, in an effort to stabilize the economy since the housing bubble, land investments have strengthened over the years.
LONG TERM INVESTMENTS IN IDAHO FARMLAND OFFER SOLID RETURNS
There are numerous investors willing to buy farmland in Idaho and throughout the Inland Northwest region. If a tract of land comes available on the market, investor coops or individual investors are digging deeper in their pockets to bid competitively, since farmland in Idaho has appreciated over time. So its no surprise that the shortage of Idaho farmland on the market has prompted a great deal of investor demand. In rare cases that farmland does appear on the market for sale, multiple offers create a bidding war, with the highest price winning the prize. According to a report produced by USDA’s National Agricultural Statistics Service, agricultural land has appreciated throughout this year in the Northwest and California. Other industrial sources are supporting the August 5, 2016 USDA report, saying that the market conditions do show evidence of an extremely tight supply of farmland.
The reason for this shortage of farmland in Idaho can be attributed to a number of reasons. The biggest reason is that many of the institutional investors are running to farmland as a long term investment. These investors see farmland as the only alternative asset with real growth potential, especially when crops produce a return of anywhere from 6% to 9% annual income. That beats the rate of return on interest bearing savings, CDs, treasury bills and other financial interests. Pension funds and Hedge funds are also reporting an increased interest in Idaho farm investment. This allows them to diversify and take advantage of the business slump in the agriculture industry.
FOOD DEMANDS INCREASE AS EARTHS POPULATION INCREASES
Another reason why farmland is experiencing massive investments is that the investors believe that the food demand will rise as population increases in all parts of the world. This will be led to by increasing urbanization which is, in turn, resulting in reduced farming land, and therefore investors will flock to farmland.
Idaho real estate broker, RaWanda Goehring, says that there is a shortage of Idaho farmland that is leaving some of her clients wanting more and having to wait on the waiting list. “There is a shortage of inventory in our region of Central Idaho, and that is a fact that many investors are facing,” says Rawanda. As a real estate broker and agent, she says that many people are not aware of the fact that Idaho farmland is in low supply. This is because many of the farm owners in Idaho are sitting on farmland that is more valuable than what they thought. The current opportunities to satisfy the diversity of demands for farmland are very challenging and really becomes a waiting game.
AUTOMATIC LISTING NOTIFICATION KEEPS BUYERS AND INVESTORS ALERTED
According to RaWanda, when it comes to the high demand for farm and ranch land, she advises investors to sign up for Central Idaho Properties automatic listing notification. Buyers can register for an account, set their criteria for the type of property and the specific geographical areas they’re interested in, and whenever a new listing is entered by any member of the Lewis Clark Association of Realtors, the system sends an immediate alert to the email on file with a link to the listing for all details and photos. The response to the alerts can be immediate, whereas if she is out showing property or meeting with clients, her ability to review new listings can delay the shortlist of buyers. So the Automatic Listing Notification is an immediate digital service that works really well.
IDAHO CROPLAND VALUES BEAT USA AVERAGE
According to the report by USDA’s National Agricultural Statistics Service, the average value of US cropland is $4090 which went down $40 from the previous year. However, Idaho average cropland value rose from $100 which is 3.1 percent to $3300. Ben Eborn, an economist at the University of Idaho Extension, said that the report showed just the first dip in the national land values. According to him, buyers had been paying more than they could generate from their farms in the previous years which he called the years of sky-high commodity prices. The economist still receives phone calls from investment firms and retirement funds inquiring about the economics of Idaho farmland. Some of the investors in Idaho have also been leasing the land back to the original owners or farmers who formerly owned the land to keep the land productive.
IDAHO FARM AND RANCH PROPERTY VALUES CONTINUE TO RISE
Idaho farm and ranch property have continued to rise in price, and the value has continued to strengthen. This is according to Doug Robinson the senior vice president of Western Idaho with Northwest Farm Credit Services. He also said that there is a decrease in the number of transactions on the property market place which means that the supply remains tight so far. Doug anticipates that Idaho farm and ranch property value will continue to be stable in the core growing areas. Some farmers in Idaho have also continued to see high sale prices of farms in the area. They have however managed to lower the rental agreements, and they are still anticipating negotiating the rest of the arrangements next season.
Some Idaho ranchers blame all the outside interests and investors for paying more than the land is worth. This skews the market and does not favor the farmers in any way. Some of them have been forced to reduce their herds because they can no longer be able to buy or even lease grazing land in the area.
Farmland in Idaho is still expected to keep increasing in value, but according to the farmers, it is not reflective of what the land can produce. There is a stiff competition of investors with the dairies that depend on the land to support their herds which are in turn keeping land value in Idaho high.