Land Report paints picture from regional data (Ground Truth)
(Editor’s note: Ben Alder is the Principal of The Land Group.)
Happy New Year! Please forgive me, but I will do a quick introduction. I have been working in the field of natural resources throughout my 24-year career.
After a little stint on Capitol Hill, I worked as a wetland biologist and then started a conservation consulting company while I developed my brokerage business over the past 16 years. Now as a land broker, together with eight teammates we launched The Land Group.
The Land Group is the Chesapeake Bay Region’s only singularly focused land brokerage. Our footprint extends across 32,000 acres of land listings in four states. We serve Maryland, Delaware, Virginia, and Pennsylvania.
Visit our website at thelandgroup.us to preview our inventory and learn about the additional land consulting services we provide. Our consulting services assist landowners with conservation programs, land entitlements, GIS based land evaluation, and we regularly conduct highly targeted land searches for specific land use needs. In 2019, we worked for 100’s of private landowners, as well as, a breadth of nationally based agribusinesses, both domestic and International solar developers and several non-governmental conservation organizations.
Each year we publish a Land Report focused on reporting data about land sales throughout the region.
Aggregation of this data is a significant effort each year and we provide it for free throughout the year via our website or we can mail you a hard copy.
Send me an email at firstname.lastname@example.org with your request for the Land Report, name and mailing address.
Additionally, via our Land Portal section on the website, we provide a record of each qualifying sale (50 acres and up in most counties) showing a map and description of the trade. We update the data typically on six-month cycles. Enroll directly on our website and we will approve your access to the Land Portal.
Back to the topic at hand, the most direct question I am asked is “How is the Land Market?”
With confidence we can answer this question. Each year however, I like to remind folks of how we define the land market and why our data is different from the traditional appraisal process.
We work to answer the question like you as a buyer look at the market and how you think in terms of land use. We distinguish value between land use cover and don’t blend numbers across those land types.
This ultimately keeps us from having to make percentage adjustments in value analysis and keeps the discussion in terms of how a buyer considers the utility of the land type they are investing in.
Additionally, it should be noted we do not evaluate land in our data sets, which include significant improvements, as it is difficult to make proper value adjustments and remain objective.
This year we reviewed 275 land sales in 10 counties, including new counties of Carroll, Baltimore and Charles. Several observations in the data are highlighted in the Land Report provided on our website. Here are a few take home messages from the report.
First, velocity of land sales is up overall both in farmland and timberland tracts from the previous two-year cycle. The delta in these figures should be qualified, as in previous years we removed state and federal land sales from the data. After internal debate, it was decided to keep this sales data in all future sales data, as the state and federal land acquisition process follows rigid guidelines and often set the marketplace benchmark in the given market. In any case, the number of trades occurring even with our data adjustment demonstrates a considerable increase in activity.
While velocity has increased, average price per acre of farmland and pastureland remains consistent but with modest increases. On Delmarva, Sussex County, Del., and Queen Annes County, Md., exceed the $7,000 an acre figure while the Mid- and Lower Shore counties all hover from $5,500 to $6,000 an acre on average. Our new counties in Carroll and Baltimore show us the influence of land use change and the influence of urbanization to land value with $11,800 and $14,900, respectively, per acre.
Worcester County and Dorchester County each enjoyed a dynamic market place this year in that Dorchester had over 20 trades of farmland up from five in the previous period. Worcester land data had several high farmland trades near the Berlin area, which exceeded $7,500 per acre for farmland.
Timberland sales represented 148 of the total sales analyzed in the 2018-19 data set. The highest values in timberland on the Eastern Shore were witnessed in Queen Anne’s County at $2,916 per acre, whereas, Dorchester and Sussex counties each were balanced around $2,100 per acre. In Delaware, we regularly sell smaller timberland tracts at $4,000 an acre for land that is not under a conservation easement and closer to the $2,000 an acre rate for land under conservation measures. The most difficult fact in timberland in our region is to recognize value of these timberland sales is influenced little by the value of the standing resource on the stump. The declining demand for timber resources on the Shore over the past 30 years has culminated in today’s low timberland values and asks the basic question: Is the Delmarva region ready for new investment in the timber resource industry? Stay tuned… our fingers are crossed.
Another question I am often asked is: “Who is buying land?” This is usually predicated around the concern that land use is changing. I can dispel that myth for you. Most of these trades are conveyed to new owners for the purposes of farming, hunting and outdoor recreation. The most threatened land is in Sussex County and the coastal bay region of Worcester County. Pockets of Wicomico County (Salisbury) and Talbot (Easton) face some development pressures, but only very small land tracts are being converted and typically they are close to or within the urban core. The long term vision of smart growth development and land planning in Maryland are well-demonstrated around our towns on the Shore, while Western Shore counties have proven how valuable land becomes when faced with transitional land uses as in Howard County where land values can easily reach $50,000 an acre for residential development.
This leads to another “hot topic” in recent months that our farms are being covered with solar development. The “on the ground reality” simply does not support that impression, but unfortunately there were and are so many offers written by solar developers it left our community feeling that we were facing a major land use change by solar development. We have experience working in seven states consulting on solar development. Nine out of 10 projects will never be built and it might be 9.9 of every 10 will not be built.
There is far less than 3,000 acres of actual solar development built in Maryland today and a recent Wall Street Journal article suggested less than 250,000 acres are constructed in the entire United States.
There will be some additional land use change for solar in the Chesapeake Bay region, but it will not dominate our future and I believe the most critical point today is to ensure there are proper setback regulations and viewshed requirements. Current estimates of the policies established by the legislature in Maryland suggest the goals for 2020 are to develop 7,000 acres of land for utility scale solar. At best, about half of this goal has been met.
Goals for 2035 suggest greater adoption of utility scale solar and suggest about 42,000 acres of land will be utilized. Even in this case broadly this means less than 2 percent of farmland will be converted to solar installations. The Land Group’s experience in the industry suggests reaching even 10,000 acres of solar development will be a significant hurdle in the region and we are simply not seeing enough solar development sales to indicate there will be much deployment of it in the immediate or near future.
My takeaway from the current land sale data suggests the market shows land as a stable long-term investment in the Chesapeake Bay region. And while it might be a bit of a seller’s market, I am reminded of a favorite American author, Mark Twain, who said, “Buy land, they’re not making it anymore.” In fact, one landowner revealed to me how pleased they were in our sale this past summer when he explained the appreciation of his investment in the land I sold for him was more than 400 percent and then he turned right around and bought more land.
Both history and current economic conditions point toward making part of your investment portfolio contain land investments. If you make your livelihood from land like agriculture, your returns are potentially even greater. Although, I recognize the alternative outcome as well in bad growing seasons, but at least in that scenario you can be assured your land value will grow and never go to zero or negative. No other assets have this characteristic as land does. It’s never worth nothing.
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P.O. Box 2026 Easton, MD 21601-8925