BUFFALO — Agricultural land values are rising in Johnson County and across the country, handing local landowners both opportunities and challenges.
“Some of this stuff, we would not have guessed it would have sold at as high a price as it has,” said Byron Geis, a sales associate with Chase Brothers and rancher in Johnson County.
Farm real estate in the United States, a measure of the value of all land and buildings on farms, increased $220 to an average of $3,380 per acre from 2020 to 2021, up 7%, according to the Land Values 2021 Summary from the National Agricultural Statistics Service.
In Wyoming, farm real estate values rose 5.3% to $790 per acre.
“There isn’t really a place that hasn’t been affected,” Geis said.
Geis said the increased prices are due to a range of factors, including migration from metropolitan areas to rural areas during the pandemic and rising commodity prices (which are contributing to a strong agricultural market).
Prices are also increasing because of a lack of inventory, a particular problem in Johnson and Sheridan counties, Geis said. The number of properties for sale has fallen drastically, and when one does hit the market, it’s snapped up much more quickly than in the past. The scarcity drives up prices.
In Montana, which Geis said has had the same experience as Wyoming, the number of properties for sale has fallen by almost 100% since 2020, according to Montana Land Source, which tracks agricultural properties for sale in the state.
Properties that would have taken 12 to 24 months to sell before now take just one to six months to sell, Geis said.
For ranchers looking to sell right now, “some of them are able to name their price,” Geis said, but for others, it’s a problem.
Some of those properties are purchased by out-of-state buyers looking for a lifestyle transition, and growth and development in the area have led to concerns that Johnson County is losing the rural quality that makes it unique, Geis said.
But he estimated that between 80% and 90% of the people buying agricultural land intend to keep it in some way agricultural.
“They’re not going to operate it maybe the same exact way or to the full extent, but I do think people have that desire to have some animals,” Geis said. “They love the story of it too, right? The experience of the Wyoming rancher, and things like that. So I think that’s a good thing.”
Geis said that may open the door for good land management and leasing opportunities for those who buy property but don’t necessarily want to work the land themselves.
But for people without capital hoping to start ranching or farming, or even established ranchers looking to expand, times can be tough, according to Luke Gay, a business lender at First Northern Bank who works with commercial and agricultural operations.
Especially in the midst of a drought, people may need to expand their land to ensure their livestock have enough to graze on. Others may be hoping to use more land or different land to diversify their operation.
But the high prices are prohibitive for some local ranchers, and Gay said there’s some people who aren’t able to buy land or able to take out large enough loans because of the price.
At the same time, farm finances and credit conditions have improved and interest rates are at historic lows, according to a recent report by the Federal Reserve Bank in Kansas City, meaning now may be the best time to purchase land.
That leads to a difficult choice, Gay said: take advantage of the favorable loan conditions now or wait for the land to potentially become cheaper in the future.
It is a situation, Gay said, where some people are “danged if you do, danged if you don’t.”
While neither Gay nor Geis said they had firm expectations for land values in the coming years, Geis said he thought it was unlikely that people would stop buying land in the near future.
“I think people love the tangible asset of a ranch, and being able to control their own piece of land and their own destiny as far as how they spend their time and energy on a private property,” he said.