2003 Market Overview
LOOKING BACK -- Since January 1, 1988, Agri-Business Real Estate Services has maintained a statistical record of all farms sold through the Willamette Valley Multiple Listing Service for the purpose of monitoring farm land prices, trends and etc. It is our belief (supported by the statistics) that this enables us to be a leader in the marketing of agricultural real estate as well as a reliable source of information for area farmers, bankers, appraisers, attorneys and other businesses.
Since we began keeping these statistics, 3973 farm properties have been reported as listed for sale through the WVMLS, of which only 30.02% (1193) were sold; selling on an average of 222 days at 90.69% of their listed price. When year ending 2003 statistics were reviewed we found a mixed bag wherein the percent of listed-farms-sold actually increased from 17.2% in 2001 to 35.05% in 2003, while at the same time the days on market increased by almost two months from 190 days to 245 days, and the average sold-to list price decreased to 88.41% from 93.81% in 2001.
The market absorption rate (farms sold), which had been in a steady decline since 1998, continued in a positive direction rising from 31.3 in 2002 to 35.05% in 2003. The peak absorption occurred in 1996 with 43.8% and bottomed in 2000 at 16.67%. The 16 year average is 30.93% and the 5 year average is 24.08%. (The flip side of this is 64.95% of the farms offered for sale in 2003 did not sell, which is substantially down from 82.77% not selling in 2001) Total volume of sales in 2003 ($26.4 million) was down from the record year 2002 ($30.3 million) but was still up substantially over the 1998 – 2001 period ($18.04 Million) average. While it has appeared to be a somewhat slower market the past five years, it has definitely not been a “Buyer’s Market”. This conclusion is drawn from the fact that while the number of farms being sold has been declining over that past five years the average mean price per acre has held steady to actually increasing slightly.
We also believe these statistics demonstrate that properties listed for sale at prices reasonably close to their actual fair market value have a much greater chance of selling. Therefore, as previously stated in the 1998 overview, “Agri-Business Real Estate Services” believes that in addition to marketing a property, it is our job to assist Seller’s in properly pricing their properties to enhance its’ salability while providing prospective Buyers with a realistically priced inventory of properties to consider.”
LOOKING AHEAD -- It should be noted that from about December of 1997, which culminated a sustained period of time when Willamette Valley farm real estate values were appreciating consistently 3% to 5% a year, thru mid 2002, there was little or no appreciation in our general farm land values. This was primarily due to the adverse economic conditions that faced our farmers during that period of time and their adjustments to them. Since that time farm sales indicate that farm land values have again begun to rise strongly.
The current market appears to be the recipient of Buyer’s favorable feelings about the low cost of money and a persistent desire on their part to own something tangible. Buyers we are working with are lifestyle folks who want to experience (or return to) a rural environment, investors and private trusts, who want something tangible or at the very least, a diversification of their assets.
And yes, there still are farmers looking for that right piece of land. Agricultural producers are still the main driving force in land values. Recent good years in the nursery, Christmas trees and grass seed industries have led to some aggressive land purchases.
Jon Fields, Broker