… while median price per acre of agricultural land only fluctuates slightly since 2014
The number of sales of farmland and other agriculturally used land in Frederick County of 100 plus acres have bounced around erratically over the last 13 years from a low of a mere two transactions in 2012 to twenty-one in 2016. With a total of 133 closed deals that do not include heavily improved properties, the overall average per year rounds out to ten.
The median farmland price per acre at the peak of the last economic boom (2007) hit a high of $11,800, but steadily slid by an average of 13% to $6,700 per acre in 2011. With the exception of 2012 that figure has averaged reasonably steady between $400 and $900 per acre (from this year’s high of $7,100 to $5,800 in 2017).
Now, these per acre prices leave some readers a bit baffled, as many of those close to local land sales statistics, may be wondering why these figures are low compared transactions where farms have sold between ten and twenty thousand dollars per acre.
There are five primary factors in this study that throws that assumption out the window:
First, properties at 100 acres or more are only included – on average, the fewer the acres, the higher the price one is willing to pay.
Second, properties heavily improved have been excluded — those with large and/or expensive dwellings and/or outbuildings used for specialized purposes or just a large amount of square footage under roof can skew the base value of the land in a positive or negative manner, depending upon the current functionality of the buildings.
Third, these statistics include all types of land found on a farm – high quality soils to low quality, good timber land to scrub forests and level land to those with extreme slopes.
Fourth, all locations with the county were included – from remote to high profile strategic settings for potential change in use.
Fifth, some properties qualified for state or county agricultural perpetual easement programs, where the government will pay property owners often significant sums of money for extinguish all future development rights that run with the zoning or location of the land. Over the years, the MacRo Report Blog has featured many articles on the topic of land preservation.
Bottom line for one considering buying or selling farmland, it is important to understand all the variables associated with the valuation of agricultural land, which are often extreme.
Please know that the MacRo Team is available to discuss the particulars about your situation; so please don’t hesitate to contact us.
Rocky Mackintosh, President of MacRo, Ltd., a Land and Commercial Real Estate firm based in Frederick, Maryland, has been an active member of the Frederick community for over four decades. He has served as chairman of the board of Frederick Memorial Hospital and as a member of the Frederick County Charter Board from 2010 to 2012. He currently serves as chairman of the board of Frederick Mutual Insurance Company. Established in 1843, it is one of the longest enduring businesses in Frederick County.