Severe weather and slipping crop prices haven’t yet dragged down Canada’s agricultural real estate values, which overall continue to rise, but at a relatively slower pace, according to Re/Max.
The international real estate organization on Tuesday released its annual Farm Report, which follows 20 distinct ag real estate markets across the country.
Prices in most markets across the country made small increases or held steady over the past 12 months, the company said, noting strong demand and limited supply continued to edge prices higher and spur sales in many parts of Canada, but other areas saw prices level off and sales volumes drop.
Except for Alberta and Ontario’s Chatham-Kent region and parts of the Ottawa Valley, where “significant” price increases are expected to continue, farmland values are expected to “stabilize or achieve moderate growth” in coming months, the company said.
Lower crop prices, flooding in some areas and a “ruthless winter” across Saskatchewan, Manitoba and Ontario didn’t significantly impact farmland values, Re/Max said, though sellers in the hardest-hit areas reported fewer transactions and saw increases in days spent on the market.
“Intense demand and short supply in Alberta has caused bidding wars like we see in Canada’s hot housing markets,” Elton Ash, regional executive vice-president for Re/Max of Western Canada, said in the company’s release.
“Further east in Saskatchewan, prices have gone up 10 per cent in the face of a challenging growing season.”
Land in short supply left “well-financed” Alberta farmers ready to make a deal on short notice, Re/Max said, noting tiled land, for example, sold for as much as $10,000 per acre in southern Alberta, up 20 per cent over the previous year.
Values for scrubland and other “non-productive” Alberta land also rose on demand from “affluent urbanites seeking to escape to the tranquility of the countryside.”
Parts of Saskatchewan and Manitoba saw relatively “softer” demand, but despite conditions eating into profitability for farmers, sale prices rose to between $950 and $2,200 per acre. That said, listings in those areas “stayed on the market for months and in some cases, years without selling.”
Land in Saskatchewan’s northwest listed for around $1,800 per acre; by comparison, some small packages of “Regina clay” land approached $2,800 per acre. In east-central Saskatchewan, the $1,150 to $1,350 per acre range was the “strongest segment” for 2014, the report said.
Some Saskatchewan land, listed by “optimistic sellers” at higher prices, languished for months without selling, the report noted.
“Willing to wait”
In southwestern Manitoba, some sellers have been “testing the waters” at $2,000 per acre, but prices have generally risen to $1,500-$1,600. Prices reaching $3,000 per acre are “more common” in the province’s east. The majority of prospective buyers in the southwest, the report warned, are “local farmers who are willing to wait for a deal,” so most farms now remain on the market for “at least” 12 months.
British Columbia saw some of the highest and lowest prices paid for farmland, as dairy farms in the Chilliwack-Fraser Valley area sold for up to $63,000 per acre and bare land in the northern Peace River region sold for just $750 to $1,550 per acre. The Chilliwack-Fraser Valley area, also popular among berry farmers, saw values doubling those of fertile farmland in southwestern Ontario.
In Canada’s East, “the rate of price increases has generally slowed over the past 12 months (but) farmland values are nevertheless at record highs,” Gurinder Sandhu, executive vice-president for Re/Max Integra’s Ontario-Atlantic Canada division, said in the same release.
“We’re reassured that sellers haven’t seen land values depreciate with lower commodity prices and the long, nasty winter,” he said.
North of the Greater Toronto Area, farmland slated for non-farm development reached $54,000 per acre, more than double the price for land used for farming in the region.
In southwestern Ontario, Chatham-Kent’s soil quality boosted prices to $25,000 per acre, up nearly 40 per cent over the previous year. Some land in that region used to grow tomatoes, cucumbers and other vegetables sold for $18,000 to $22,000 per acre; some was “quickly” switched to other crops after Heinz stopped producing ketchup at Leamington.
However, such prices in southwestern Ontario also spurred a “small exodus” of farmers, particularly Mennonites, moving northeast to areas such as Quinte and Renfrew County where comparable land sold for between $8,000 and $12,000 per acre.
Nova Scotia’s Annapolis Valley also saw “modest” growth over the first nine months of 2014, Re/Max said, noting an increase in the number of vineyards helped boost prices to as much as $10,000 per acre in some areas.
Generally, Re/Max said, the “most common” buyer of Canadian farmland is the experienced farming family looking to expand operations. “Very local” considerations, such as a processing facility or a farm’s existing holdings nearby, also drove individual deals.
European buyers, who have contributed to demand in previous years, showed less influence in Canadian farmland markets due to a rise in the Canadian dollar against the euro, starting in 2010 and peaking in 2013, Re/Max said. — AGCanada.com Network