Are You a Bull Or Bear? State of the Colorado Land Market

Submitted by:  Bart Miller, ALC
Vice President - RLI Colorado Chapter
Managing Broker (Lic: CO, NE, SD, KS, WY, MT, NM, OR)
Mason & Morse Ranch Company

Are You a Bull Or Bear?  State of the Colorado Land Market

Bullish or Bearish in Agricultural Land?

Bull:  As a land professional one could argue the ingredients of an exceptional bullish year in land sales is on the horizon for Colorado.  We all know agriculture farmland and pasture land is in high demand across the country.  Regionally across the plains and eastern portions of the mountain states farmland has appreciated above 20 percent and pastureland has followed with a regional average of 11%. Colorado is no exception.  Our diversified land based state is dominated by agriculture production and grazing lands.  The only concern…water. Will it rain?  It has been a dry year both in the mountain regions and into the eastern plains.  Even if the rains do not come, the value of this asset class both in the east and west of the state will see additional gains this year as investors continue to seek agricultural production and grazing lands as a secure investment.  The same holds true for oil & gas mineral rich lands across the state.

What about Colorado Recreational Land?

Bull:  Ok...I’ll go out on a limb here!  Yes, more bear sightings have been reported recently across the state as these beasts come out of hibernation are fiercely hungry.  Financially speaking however, the bears, have come… feasted…and now are retreating back to the den albeit slowly and with caution!   Colorado recreational land is trending positive.  We are seeing 2006 pricing from realistic sellers.  Buyers are starting to perceive value putting forward purchase contracts.  Below are a few key statistics to consider in your own valuations and opinions of the Colorado land market.

Rocky Mountain Region Business 2012 First Quarter
Sales Volume: up 58%
Units: up 22%
Average Sales Price: up 29%
List to sale Ratio: 2012 = 5.9 vs. 2011 = 8.8
Note:  This data was tabulated from the regional United Country
affiliate offices across the state of Colorado. The data represents
a diversified land base cross section of the state in the southwest,
western slope, mountain and Front Range territories.

Based on the statistics, Colorado has seen six straight months of double digit growth in the region…dating back to October of 2011.  Because of the good sales momentum, the listing inventory is down.  With the list to sale ratio coming down from 8.8 to 5.9 and comparing the raw data from 2011 to 2012, properties are moving 33% faster this year than they did last year… And are doing so at a 29% higher price.  Personally, I believe 2012 will be a foundational year to grab a solid footing again.  I think volume, units, and list to sales ratio seem to be in logical range.  The substantial increase in price could be a bit high year over year however.  The smaller recreational parcels will see the most significant volume and price increases as compared to appropriately priced larger luxury ranches available to the market, of which, many are not available for sale.  If you agree or disagree the common trend across all statistical sets is UP.  In the land business 2012 is showing positive signs.  The Bulls are on the run in Colorado!