California’s Central Valley Agriculture Properties Rebounding

Last in a Four-Part Series

It’s no question Central Valley farmland prices have been plowed under by the recession.  The question is when agricultural values will rebound.

California’s rich Central Valley farms were not alone in suffering a slump in values.  Values of the nation’s farmland and buildings dropped in 2008 for the first time in 20 years, according to the U.S. Department of Agriculture.  The price of farmland in 2008 slipped 3.2 percent compared to 2009.

Ag lands are typically down about 20 to 30 percent from boom years of 2005-2006, but did not suffer as much as residential properties.

Kevin Johnson - Dixon Office, call - (707)685-3870 email - kevinjohnson @c21mm.com

“Ag is slower, however it’s getting to be more of a stabilized product,” said Kevin Johnson, a Realtor based at Century 21 M&M and Associates office in Dixon.  “It’s not taken the beating of residential property.”

The drop in farm values, hurt by reduced farmers’ profits and less demand, has created ag buying opportunities.

“It looks like there are a lot of bargains out there,” said Bob Sanders, a Century 21 M&M Realtor based in Fairfield.  “With the banks and short sales being flushed out, the prices are at the bottom.”

As an example, Sanders cited a 20-acre farm and house in Arbuckle recently listed for $300,000.   “This was probably close to $600,000 in 2005-2006.  There were six to seven offers on it.”

Linda Green, the broker and manager of Century 21 M&M offices in Dixon and Vacaville, said there have been some signs of an ag recovery.

“Last year was one of the best years for tomatoes,” she said.  “Dixon has a Campbell cannery and we know the price of tomatoes will be down this year, but not too much lower.”

Linda Green - Dixon Office, call 707 678-9211 email - lgreen@c21mm.com

Green said beef and sheep, popular in her area, had a tougher year than row crops.

“It was a bad year for beef and sheep because hay costs were so high,” she said. “If they didn’t have permanent pastures, they had to buy hay.”

Beef, sheep and dairy owners have benefited this year from dramatically lower feed prices and above average rains, which has kept pastures green and growing.

Johnson said ag land prices have leveled and he predicts more sales and activity in the next six to 12 months.  “The biggest problem is availability of money and that goes for every level,” he said.  “I have seen some loosing up of money.”

Green said the early rebound is starting with smaller farm properties.  “ We don’t have a lot of people selling farms like in 2006,” she said.  “We just have small listings.  None of the big stuff.”

The recovery of farm values should pick up steam by 2012 and hopefully by 2011, said Green.

Bob Sanders - Fairfield Office, call - (707) 330-5194 email - bsanders@c21mm.com

Fairfield’s Sanders is a little less optimistic about when ag properties values will be strongly rebounding.

“That’s going to be a while,” he said.  “Maybe 2013 or 2014.  You’re talking three or four years away.”

Farmlands values, like residential properties, are cyclical in nature, according to Sanders.

“It’s an 11-year cycle and 2005 was top,” he said.  “Right now we’re right in the middle.”

Feel free to ask questions, make comments or suggest new topics for this blog. Just use the Comment box below, or send an email to newsandviews@c21mm.com. Why not subscribe to this blog? Just enter your email address in the Email Subscription box (above and to the right), and you will be notified anytime we add new articles.

Add to FacebookAdd to DiggAdd to Del.icio.usAdd to StumbleuponAdd to RedditAdd to BlinklistAdd to TwitterAdd to TechnoratiAdd to Yahoo BuzzAdd to Newsvine

Advertisements

2 thoughts on “California’s Central Valley Agriculture Properties Rebounding

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s