This is the final article in a three-part series on local real estate valuation and sales.
A recent USDA land price report showed a continued upward trend in land prices across the United States. This trend was most pronounced in the Southwest, where rural land prices rose 7.4% and 8.5% in Texas and Oklahoma, respectively. New Mexico’s value is stable.
Factors contributing to the rise in value include coronavirus stimulus, low interest rates and a growing interest among city dwellers to move to the countryside.
So who buys rural property in the Southwest?
Investors include other farmers and ranchers, outside interest groups purchasing land for recreational use, investors looking for a safe haven for their funds, and some foreign buyers.
farmers at market
Charles Gilliland, a research economist at the Texas Real Estate Research Center in College Station, says that based on mostly anecdotal reports, “Farmers buy farmland, backed by cash from insurance and stimulus programs, and “They are outbidding investors.” Recreational investors are more active in purchasing ranch land than investors with agricultural interests.
“Buyers in these markets have a complex set of purchasing motivations,” Gilliland explains. “Most brokers I spoke to say that buyers typically don’t talk about their motivations for a purchase. Nevertheless, many buyers are concerned about economic and social uncertainty. sees land as a store of wealth.
“We’re also seeing more buyers focus on conservation, such as restoring native plants. Some have started funds to develop such properties for sale to wealthy individuals here in Texas.”
“Additionally, some wealthy individuals, with new economic opportunities in mind, are purchasing large ranches for work sites. The Wagoner Ranch and Four Sixes (6666 Ranch) deal comes to mind. Masu.”
Gilliland said in the Permian Basin, “the oil-driven price activity that drove ranch prices to unprecedented levels has disappeared.”
Foreign buyers are also participating, but not as much as recently.
oklahoma
Some foreign investment happened after the Oklahoma State Legislature passed SQ 788 (Medical Marijuana Legalization Initiative) in 2018, said Roger Saas, Oklahoma State University agricultural economics associate extension specialist in Stillwater. ing. I’m a buyer, but I don’t have any data to determine how much. It affected local land prices in several areas around the state.
“Recent regulatory changes and additional enforcement of licensing requirements have reduced demand for land by growers in 2023.”
new mexico
Dwayne Nunez, New Mexico associate broker for Charles S. Middleton & Sons in Lubbock, said of the eight ranches his firm sold in 2023, “all were transferred to agricultural interests. ” he says.
He said many buyers are from Texas. “To my knowledge, we have never sold to a foreign buyer. In 2022, we sold one large holding to New Mexico Game and Fish.”
He said the acreage will come from production agriculture but will remain as hunting land with conservation measures in place.
“Other brokerages also sell rural properties to wealthy individuals,” Nunez said. “We don’t know if they’ll ever go back into production.”
texas
“We don’t hear much about foreign buyers,” Gilliland said.
Say. “They’re here, but they’re less visible than in past decades. Dairy farms in north Texas have attracted some foreign investors. The biggest purchases have been in the forests of east Texas. land, most of which is owned by Canadians.
“Chinese buyers are attracting a lot of attention, but in terms of land area, foreign owners only make up a small portion of the land. One Chinese investor bought the Devils River drainage for the purpose of installing a wind farm. These plans were met with opposition from conservationists, a lack of link to the statewide power grid, and being in the middle of military flight training. has been cancelled.”
Foreign holdings
Foreign interests held approximately 40 million acres of U.S. farmland as of December 31, 2021, according to a December 2021 U.S. Agriculture Service report. This represents his 3.1% of all private farmland and 1.8% of all U.S. land.
According to the report, Texas has the most foreign-owned farmland in the United States, with about 5.3 million acres. Maine has the second largest amount of foreign-owned farmland, with just over 3.6 million acres, or about 20.1% of the state’s privately owned farmland. Colorado has her third largest amount of foreign-owned farmland, with approximately 1.9 million acres.
Foreign companies own 1,670,511 acres, or 4.4% of the farmland in Oklahoma. In New Mexico, foreign companies own 1,263,241 acres, or 3.8% of the farmland.
foreign buyers
The Congressional Research Service’s January 2023 report, “Foreign Ownership and Tenure of U.S. Farmland,” shows that five countries accounted for approximately 62% of all foreign-owned U.S. farmland in 2021. Canada tops the list with 31%, mostly forest. . The Netherlands came in second with 12%, followed by Italy with 7%, and the UK and Germany with 6%. Other countries with more than 500,000 acres of land include Portugal, France, Denmark, Luxembourg, Mexico, Switzerland, the Cayman Islands, Japan, and Belgium.