Valley farmland values grow to record highs
Apr 20, 2014
Rising crop prices, a limited supply of property and an ongoing drought are driving agricultural land prices to new highs in the San Joaquin Valley, appraisers say.
Much of the activity in the market is being fueled by buyers seeking land to grow nut crops, including almonds, pistachios and walnuts — all commodities that have benefited from a surging export market.
Demand for land with a relatively stable water supply and good soil has been so high that sellers are fielding multiple offers.
"Right now, we probably have five buyers for every piece of property that becomes available," said Jim Olivas, vice president and real estate broker at Pearson Realty in Fresno. "And it is pushing prices to levels we have never seen before."
Last year, values for properties with almonds, tree fruit and grapes reached all-time highs, according to the annual Agriculture Land and Lease Values report prepared by the California chapter of the American Society of Farm Managers and Rural Appraisers.
In Fresno County, the per-acre value of almond property reached a high of $28,000, up from $20,000 in 2012. Pistachio acreage continued to be the priciest, ranging from $25,000 to $33,000, the same as in 2012.
Valuation for walnut acreage in Tulare and Kings counties also was on the rise, reaching a high of $32,000 in Tulare and $30,000 in Kings.
Values for tree fruit acreage in Fresno County jumped from a high of $17,000 an acre in 2012 to a high of $25,000 last year. And an acre of raisin grapes reached a high of $23,000, up from $18,000 the year before.
Real estate agents and appraisers say that while prices have risen rapidly, they are not overly concerned about a rapid decline any time soon. If nut prices remain high and the export market continues to flourish, land values also will climb.
"When we start to see commodity prices drop, it will affect the price of land," said Stanley Kjar Jr., vice president of Pearson Realty's Farm Lands Department.
Adding momentum to the trend of rising farmland values is the limited number of properties available for sale.
Pearson Realty, one of the largest agriculture realty firms in the state, normally has about 400 active listings of farmland property. Currently, the company has about 125 properties.
"This is a very, very tight market," Kjar said. "What is happening is that most farmers are making money, so there is no real need for them to sell."
The state's historic drought also is playing a role in land value trends. On the west side of the Valley, where many growers will not receive any surface water this year, they are looking to expand their nut tree holdings in areas with greater access to surface or well water. Others, however, continue to buy in the water-starved area.
Kirk Sagouspe, senior appraiser at Correia-Xavier Inc. in Fresno, said some farmers are taking a long view of the current drought, having farmed through several dry spells.
"The farmers in the most drought-impacted areas are probably some of the most resourceful and sophisticated growers out there," Sagouspe said.
"If they are buying property out on the west side, they may have alternative water sources."
The value for raisin property is rising, thanks to the heightened demand from nut crop growers.
Sagouspe said raisin vineyards have increasingly been put up for sale. Many of the lots are smaller, including 20- and 40-acre parcels that may continue to produce grapes in the short-term.
"After that, those vineyards are coming out — they are going to be developed to almonds," Sagouspe said.
The value of dairy property is stabilizing after several years of low milk prices. In the last six months, a few large dairies were sold to other dairy operators, who are expanding their operations, Olivas said.
"We have dairymen out there who are looking to move up into larger facilities because the market has improved," he said.
Citrus land values in northern Tulare County also have improved with values holding steady at a high of $24,000 over the last two years.
Consumer demand for the easy-peeling mandarins remains high, prompting an increasing trend of seeking more acres for new plantings.
The reporter can be reached at (559) 441-6327, email@example.com or @FresnoBeeBob on Twitter.