By Ozzie Jurock
(Excerpted from Jurock's Real Estate Insider, February 2013)
We urged our Jurock's Real Estate Insider subscribers to buy farmland since 2005. In fact we featured several thousand acres under the weekly Hot Property 'plot of the week'. What did we pick? Saskatchewan and Alberta. Well, last year, Re/Max released a report on Canadian farmland sales that noted that cropland prices in Saskatchewan and Southern Alberta had jumped to $800 an acre. Since then, prices have rocketed.
"We've never seen anything like this. It's like the land rush all over," said veteran realtor Ben Van Dyk, a senior agent with newly formed Farm & Ranch by Better Homes and Gardens Real Estate.
Examples: 297 acres of cropland near Lethbridge for $2.7 million; 160 acres near Baron, Alberta for $1 million.
But the real big prices are seen in farmlands close to town, since Alberta has no controls on selling agriculture land for development. For example, a 96-acre parcel with business potential just outside Lethbridge is offered at $1.3 million or around $3,000 per acre.
An even more telling stat is seen in Martensville, a suburb of Saskatoon. There, farmland on the edge of town, rezoned for residential and commercial development, is selling for $550,000 an acre, up from the $25,000 per acre it sold for four years ago.
"The [land] demand is very strong. There is not enough land available to satisfy the buyers," said Van Dyk, who describes some parcels attracting more than a dozen offers when they hit the market.
According to Farm Credit Canada, the average value of Canadian farmland increased 8.6% during the first half of 2012, following average increases of 6.9% and 7.4% in the previous two reporting periods.
Farmland values remained stable or increased in all provinces except British Columbia, which saw a 0.3% decrease.
Ontario, experienced the highest average increase at 16.3%, followed by Manitoba at 10.3% and Saskatchewan at 9.1%.
Quebec and Alberta experienced 6.7% and 5.7% average increases respectively, followed by Prince Edward Island at 3.1% and Nova Scotia at 2.8%.
Major Point: Canadian farmland values have risen steadily during the last decade. The current average national increase is the highest since FCC began reporting on farmland values; with the second highest increase being 7.7% in the second half of 2008. The last time the average value decreased was by 0.6% in 2000. With food prices rising over 40% (not 2%!) in the last 2 years ... this will continue.
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