By Jay Frazier
The first quarter of 2013 is now history and spring has finally made a weak appearance. If you recall, last winter (2011-2012) was the year of unwinter and strong land sales numbers continued through the normally slow period. 50 transactions were completed in the first quarter of 2012 with an average price per acre of $3,322. This year has been quite the opposite with snow removal being an almost daily activity and winter loathed to leave when the calendar said it should. The number of transactions for 1st quarter reflects a more normal Wisconsin winter, but when compared to last year’s unusual circumstances they appear weak.
Despite the price drop shown here, it’s almost certain the land market is in better shape than a year ago. You can see this when taking an overall look at the price trends for the past 12 months.
One thing I consider when I see a sale price spike (like in 1st quarter 2012) is the amount of tillable acreage that was sold. Currently, tillable land (cropland/farmland) is generally bringing a higher price per acre due to the faster ROI (return on investment) than other types of rural land. While tillable acreage sold in recent quarters hovered right around 30% of the total acreage, in the 1st quarter of 2012 the tillable acreage sold was 47% of the total. This appears to be the dominant factor influencing the price hike at that time. Throughout 2012 the average price dropped even as buyer activity increased. As a result of sellers becoming more motivated and buyers taking advantage of record low interest rates, a lot of excess inventory was cleared out making way for market improvement.
From the looks of things where they are right now, 2012 was the time to buy at the bottom. All factors point to slowly rising prices this year and there are even a few indications that a seller’s market may be around the corner.
Buyers and sellers need to be aware that average sale prices are only a general guideline. The demand and sales price for any particular property will most likely vary up or down (often substantially) from the averages shown. Location within a county will affect price as will soil types, zoning, road access, government programs, water, timber value, easements, rental value, lay of the land, potential building sites, access to utilities and various other factors. Of course, a home, out buildings or other improvements will also affect the value. An on-site property evaluation by an experienced land agent is needed to give you an accurate picture of what a property is worth in the current market.
To learn more about the current land market in Southwest Wisconsin, begin your search here: RuralPropertyPro.com
For those that enjoy statistics, here’s the breakdown by county:
|GRANT||1st Quarter||LAFAYETTE||1st Quarter|
|# of sales||2||8||# of sales||5||3|
|total acres sold||179||686||total acres sold||244||228|
|Tillable acres||74||272||Tillable acres||150||207|
|Wooded acres||99||269||Wooded acres||46||21|
|Pasture acres||0||138||Pasture acres||50||0|
|Wetland acres||0||1||Wetland acres||0||0|
|RICHLAND||1st Quarter||SAUK||1st Quarter|
|# of sales||5||7||# of sales||3||13|
|total acres sold||408||565||total acres sold||107||620|
|Tillable acres||86||139||Tillable acres||6||286|
|Wooded acres||302||412||Wooded acres||101||290|
|Pasture acres||20||14||Pasture acres||0||92|
|Wetland acres||0||0||Wetland acres||0||6|
|CRAWFORD||1st Quarter||VERNON||1st Quarter|
|# of sales||5||3||# of sales||1||10|
|total acres sold||336||184||total acres sold||100||1215|
|Tillable acres||96||30||Tillable acres||25||722|
|Wooded acres||231||118||Wooded acres||75||491|
|Pasture acres||20||27||Pasture acres||0||0|
|Wetland acres||0||0||Wetland acres||0||2|
|IOWA||1st Quarter||TOTAL for all 7 COUNTIES||1st Quarter|
|# of sales||4||6||# of sales||25||50|
|total acres sold||147||436||total acres sold||1521||3934|
|Tillable acres||24||200||Tillable acres||461||1856|
|Wooded acres||102||168||Wooded acres||956||1769|
|Pasture acres||2||84||Pasture acres||92||355|
|Wetland acres||19||2||Wetland acres||19||11|
*SW Wisconsin includes Grant County, Lafayette County, Iowa County, Sauk County, Richland County, Crawford County, & Vernon County. All data was taken from the SCWMLS & WiREx. Because this article was intended to review the rural land market, properties smaller than 20 acres, residential, and commercial land sales were not included. Acreage breakdown may vary due to land remnants and other factors.