According to the California Farm Bureau Federation, California farm and ranch real estate markets are in trouble, due to the "economic pressure from low commodity prices, high energy costs, dwindling water supplies and heavy regulatory burdens." Although U.S. prices are up by nearly 5 percent over the last year, California land is slowing a decline in value.
The greatest decreases have been reported for older tree-fruit and nut orchards, and some of the vineyards. Sellers are in denial about the current market and pricing and don't want to give their farms and ranches away at rock bottom prices. Buyers are waiting for sellers to give in so there is somewhat of a stalemate going on at the present time and property sales are decreasing as a result.
Just three years ago, the estimated value of raisin vineyards was $9,000 to $11,000 an acre, according to the California Chapter of the American Society of Farm Managers and Rural Appraisers. Now they are only worth about $3,000 to $6,000 an acre.
The softening in farm and ranch real estate market is seen throughout the state, with the exception of a few wine and row-crop areas, and Sacramento Valley farm and ranch lands, which are holding value, however, and there are buyers. Good rice ground is priced at about $3,500 an acre. San Joaquin Valley real estate offices, on the other hand, are starting to report backlogs of unsold ranches and farm properties. Thirty to forty percent price reductions from the 1997-1998 prices are more common.
Listings are in decline as owners dig in and try to ride out the current economic downturn. Foreclosures will undoubtedly increase and lenders may have to sell off properties although doing so will bring national media attention to the troubles that ranch and farm properties are experiencing due to commodity prices, water troubles, and high energy costs. When crop prices go down, land values go down, too.
Pat Rioux
