An analysis of rural land transfer in excess of 100 acres shows a positive uptick in values over the last two years.
It is a regular occurrence at MacRo that we receive inquiries from property owners who are thinking of selling a farm they own in the Mid Maryland region. One may think that it is a fairly simple process to establish an offering price for farmland by just looking up what a nearby property sold for, but it isn’t that easy.
Many factors must be considered when evaluating a tract of agricultural land, such as the soil types, slopes and grades, the amount of tillable land and crop yield, forested areas and the quality of the timber, floodplain and waterways, access to public roads, as well as the quality of the existing structures on the farm.
That stated, between January 1, 2013 and December 31, 2015, there were fifty transfers of rural and agricultural properties over 100 acres that had limited development potential. Out of these transfers, 12 of the properties were significantly improved with expensive homes, barns and other structures that were not used in this study.
Of the 38 remaining properties, some adjustments were made to attempt to equalize the value of the existing improvements, but overall the value of these tracts sold between $3,200 and $9,400 per acre. Sizes of the properties range from 101 to 445 acres.
In 2013, nearly $11 million in 13 transfers occurred with the median farm size being 144 acres for a price of $879,000 or $6,098/acre.
The number of sales jumped to 16, in 2014, with about $22.3 million in sales. The median farm size dropped to 139 acres, but the price per acre popped up about 10% to $6,733 for a gross median value of $937,500.
While the number of transactions dropped considerably in 2015 to 8, the median price per acre jumped nearly 12% to $7,453 for a gross median value of $1,035,000 with the median farm size remaining at 139 acres.
This three year period yielded some interesting statistics geographically, as well, for the 6,632 acres that transferred.
Two farms were sold in the Adamstown/Buckeystown area that totaled 778 acres and valued around $7,592/acre.
Eight farms totaling 1,293 acres were sold within the many Frederick zip codes at an average value of $7,227/acre.
Throughout the Middletown Valley, including Knoxville, Jefferson and Middletown, 1,472 acres transferred in 7 deals at an average price of $7,248/acre.
Only 499 acres changed hands in the Monrovia/Ijamsville area in 3 transactions at about $6,514/acre.
Two farms sold on the Frederick County side of Mt. Airy at an average price of $5,050/acre totaling 266 acres.
Thurmont, Emmitsburg and Rocky Ridge garnered 8 sales out of the 1,294 acres transferred in the last two years that averaged $6,146/acre.
There were 7 other transfers among the zip codes of Woodsboro, Keymar and Union Bridge that totaled 1,029 acres at an average price of $5,199/acre.
In most all of these cases, the intended uses were for agricultural or conservation purposes, and several of these sales involved the use of state and/or local government easement funding.
Looking ahead to 2016, from what we can tell, the market continues to be brisk and very likely will keep pace with a trend of increasing values and should easily exceed the number of transactions over 2015.
If you have a rural tract of land you are considering selling, please do not hesitate to call the team at MacRo, Ltd. We will be happy to share our experience with you at no obligation.