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