Although sales are getting back on track, prices still firming
Lenard had a good year in 2012, but it took awhile to get there. He joined Hall and Hall in 2008, just in time to see the bottom fall out of the ranch market. It didn't come back again until mid-2010.
"What happened was, the very best properties held value and continued to trade, albeit at a slower pace," he says. "Everything else declined in value anywhere from 20 percent to 50 percent."
Even with a couple of busy years in ranch sales, prices have not returned to pre-recession levels, still off an average of 20 to 30 percent -- although some firming up is occurring.
"In 2010, the disparity between asking price and selling price was 18 percent and that improved to 8 percent in 2011," says McDavid. "We haven't yet run the numbers for 2012. My guess is the disparity will be around 7 percent to 8 percent."
As with any type of real estate, better numbers depends on location. Montana's Bitterroot Valley, which was a prairie fire of activity before the recession, hasn't experienced recovery as yet. The Bitterroot was mostly a boutique ranch region and prices were over-inflated, says Lenard. "Prices dropped 35 percent to 40 percent and have not recovered."
There are a number of quirks in the ranch market. For one thing, there have been few foreclosures because many deals are done with cash. Secondly, it is one of the few real estate sectors where quality of residence is of minor importance. Indeed, high quality property that is priced right and is unimproved (few structures) has slightly broader desirability than an improved property.
In the bubble years, a lot of ranch buyers succumbed to ego-developments and built grandiose lodgings. These have not proved to be very good investments, although there are a number of buyers who like to have a good manse right there at time of purchase, so they can move in right away and not have to deal with building a brand new home on the range where the deer and the antelope play.
Steve Bergsman is a freelance writer in Arizona and author of several books. His latest book, "The Death of Johnny Ace," is now available for sale on Amazon.
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