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If you need help setting up services or accessing your accounts, please call our Customer Care Team at 866.552.9172 during business hours (7 a.m. — 5 p.m. PST, M-F) or email us at CustomerCare@AgWestFC.com.
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If you need help setting up services or accessing your accounts, please call our Customer Care Team at 866.552.9172 during business hours (7 a.m. — 5 p.m. PST, M-F) or email us at CustomerCare@AgWestFC.com.
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Interest rates, input costs, commodity prices and ongoing drought conditions are top risk factors for land values moving into 2023.
While agriculture real estate demand remains strong, inventories are generally low and affordability is declining due to higher financing costs. Demand for rural residential and recreational properties has slowed from recent boom levels. Verified sales data does not show a fall in agricultural land values despite producers’ caution around economic uncertainties. Sentiment among market participants (local operators, investors and rural residential buyers) is land values will fall in 2023 in light of increasing interest rates.
Sales value and volume
Most areas report sustained, but varied demand based on market segment and inventory levels. Sales between landlords and tenants are common and investor interest remains present. Farmland values continued to rise dramatically in 2022 (see chart below) while the number of transactions leveled off (there is a six-month lag in the data). As of Dec. 22, 2022, staff collected 932 land sales with an average value of $5,881 per acre in the Northwest.
Average and Median Land Values and Number of Sale
Appraiser sentiment
A recent survey of AgWest Farm Credit appraisal staff suggests inventories across the Northwest are low, land values are stable to increasing and listing times are stable to increasing (see charts below). Survey respondents indicated that the rural residential market has slowed significantly as it is more sensitive to interest rates than agricultural markets.
Land Inventory
Value Trends
Listing Times
Source: Sentiment Survey Completed by staff in December 2022.
Land value considerations
Interest Rates – The Federal Reserve raised the federal funds rate again in December to the highest level in 15 years and expectations are for additional increases through mid-2023. Despite strong interest from potential real estate buyers, rising financing costs are leading to increased listing times and fewer transactions. These trends are indicative of a slowing market.
Affordability – Home prices have started to decline; however, there continues to be a lack of affordable housing in some areas. A cooling market may lead to lower new developments and alleviate some upward pressure on agricultural lands. Agricultural land values are holding steady.
Commodity Prices – Commodity prices are generally positive, but many have decreased from their 2022 summer highs. Uncertainty about the future is causing some operators to delay expansions.
Drought – While most areas throughout the Northwest continue to experience some level of drought, conditions have improved with fewer areas under “extreme” or “exceptional” classifications as compared to a year ago. Precipitation levels in much of Idaho, eastern Montana and eastern Oregon are around or above 100% of normal as of December 2022, while most of Washington, western Oregon, and western Montana are hovering around 70% to 80%. Most areas in the Northwest had a strong start to the winter and are reporting snow water equivalent levels of over 100% of normal.
Average Land Values Per Acre, by State
Washington
Oregon
Montana
Idaho
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