Kern County’s agricultural real estate market continued to cool during the first three months of this year, and signs point to still lower prices in some areas later this year, according to a report released Wednesday.
The report by Alliance Ag Services and Alliance Appraisal, related Bakersfield-based companies, is the latest indication the Central Valley’s farmland market is softening after a decade-long boom that attracted large investors.
Citing a drastic decline in almond and pistachio prices and slow sales activity, Alliance said recent transactions at the high end did not exceed previous valuations and sales at the lower range actually declined in value. It said open farmland in the northern part of the county will likely see continued depreciation.
Kern almond acreage lost value this year for the first time since 2009, the report said. It estimated 2016’s almond land prices as declining between 8.7 percent and 11.4 percent on an annual basis, which contrasted starkly with the 8.1 percent to 8.9 percent per year increases the county’s almond orchards experienced between 2005 and 2016.
The county’s table grape vineyards held steady in the first quarter of this year, perhaps in part because there has been little market activity since January, the report said. Given the slide in nut prices and other permanent plantings, it said, “it will be curious to see how table grape vineyard values react.”
Kern citrus orchards also saw little to no sales activity in the first quarter, and so that market’s 2016’s annualized appreciation rate was also estimated to be flat.
As was the case last year, access to water plays a big role in setting prices, according to the report.
The report also shows that ag properties are taking longer to sell than they did as recently as last year. One chart shows a gradual decline in market times from 12 months in 2005 to one month in 2013. So far this year, according to the report, the average marketing period is more than two months.
“The sellers are pricing themselves over the market and buyers are willing to hold, is our interpretation,” it states.
Bakersfield ag land appraiser Steve Runyan, who is not part of either Alliance company, said he had little indication which way sales prices went in the first quarter, but that, anecdotally at least, buyers seem to be cautious amid lower commodity prices.
“I do hear stories that properties that were in escrow for ’X’ number of dollars two to three months ago, (but that since then) the price has been renegotiated down lower because of falling nut prices,” Runyan said.
“I hear that Realtors are showing property, and people are being cautious now, (saying), ’Let's see how big the almond crop is going to be,’” he said.
Runyan agreed with Alliance’s conclusions that water is a key factor driving prices and that properties seem to be staying on the market longer than they did before.
“A year ago, if you had an almond orchard for sale, boom it was gone,” he said. “I get the impression now that people are not so aggressive.”