# Another Disturbing Trend



## SnakeyJake1 (Mar 22, 2005)

Check out this article in this weeks Ag Week.
http://www.grandforks.com/mld/agweek/12328333.htm

Another prime example of a few wealthy people driving up land prices. Just recently there was just over 300 acres of prime deer hunting land that sold for over $300,000 near my home to people with ties to Cabelas. Obviously with no intentions of using it for farming or ranching.

We all better start pinching some pennies to possibly afford to hunt in our back yards real soon.


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## Bob Kellam (Apr 8, 2004)

*This should be sent to every ND legislator!!!!*

Posted on Mon, Aug. 08, 2005

Upward, onward

Hunting, ag economy heat up land values

By Mikkel Pates

Agweek Staff Writer

LEMMON, S.D. - Land values in southwest North Dakota and northwest South Dakota are moving upward and onward.

This summer, a few parcels have been sold for more than $800 an acre, says Shawn

Weishaar, an independent fee appraiser, who lives north of the border near Lemmon, S.D.

"And some of these don't even have to have good hunting," Weishaar says, impressed with the phenomenon. "What I knew a few months ago doesn't hold today, and I expect that to keep going."

Weishaar, 35, has been fully certified as a land appraiser in North Dakota and South Dakota since 1996. The real estate business runs in the family.

Shawn is the oldest of three children of Wayne Weishaar, an auctioneer and realtor in the area. His younger brother, Scott, works in the auction business with his father. Together, the three operate a farm and a herd of purebred Hereford cows.

Real estate family

Weishaar graduated from Lemmon High School in 1988. While in high school, he became a state officer for the South Dakota FFA and attended South Dakota State University in Brookings, where he majored in range science. He took his first appraisal class during his senior year at SDSU. After graduating in 1992, Weishaar went back to the farm.

"I always wanted to farm and ranch, but my dad told me, you need to supplement your income," Weishaar says. "We diversified beyond the farming and ranching because with so many of us here, we had to."

The three run the farm with a little part-time help in the spring and "try to balance our outside jobs with taking care of the place at home," he says.

Weishaar's break in appraising came when Steve Tomac, a rancher from St. Anthony, N.D., happened to be at one of his father's auction sales. Tomac, who grew up nearby in rural Sioux County, N.D., then was an independent fee appraiser and a state senator. Tomac offered to take Shawn as an apprentice. Shawn eventually established Weishaar Appraisal Service.

Changing landscape

Weishaar says it's hard to keep up with the land value situation in his corner of the world. It wasn't always so. In the early 1990s, farmers were coming off of the crash in land values of the 1980s.

"Everything was fairly stable back then; most buyers were local," Weishaar says. "Productivity was a very important consideration. You could put together a bunch of sales comparisons and there wasn't a lot of variation."

As Conservation Reserve Program land increased, there was an increase in wildlife - particularly pheasants. In the mid- to late 1990s, more of the land started to be sold to hunters and investors, and land values gradually increased.

Today, there are bigger jumps. Instead of looking at how productive the land is, an appraiser has to start incorporating whether it has water and trees - how scenic it is, Weishaar says.

Big blocks of CRP still sell well, but the river land has taken off in the past two years. "Anything with trees along a river or creek is just 'golden,'" he says.

Weishaar uses his own neighborhood as an example. Pastureland that would have sold for $125 to $150 an acre in the early 1990s now goes for more than $300. "And if it has wooded draws running through it, it can sell for over $400 an acre," Weishaar says. "It's changed that much in a 10- to 13- year period."

A curious thing is how weather patterns can affect the land market. "The drought had slowed the increases in some areas. Now that the moisture is picked up, I expect it to go up at a stronger pace. And it has, again - a lot of outside hunting pressure. On the agricultural side of things, the areas that have had high-yielding crops have seen land values and cash rents skyrocket, too."

High pastureland prices also are a function of the cattle price, Weishaar says. "But if they have scenic attributes - a river going through them - it can go up from there."

On golden water

When land is sold for hunting, the original owner often can rent it back. Most of the land sales have some public exposure, through auctions, bids or a real estate listing. "I don't know of an online land sale yet," Weishaar says.

In a hypothetical example, a landowner who sells a pasture with a good deer population, wooded draws and a creek might sell it for $400 an acre and rent it back for about $10 an acre, while someone else pays the taxes.

"That's not a very good rate of return for the person buying it," Weishaar says. "But the person selling, they can take the sale money and pay off debt and continue to use the property. That's pretty common. Land prices have outpaced cash rent, especially on these recreation properties."

Sales of recreational or investment land can range in size from a quarter of land to 7,000 acres at a crack.

"On the big ones, someone has probably sold some land in another location and is using a '1031' tax exchange to avoid capital gains," Weishaar says, noting the procedure works on smaller tracts, too.

The land buyer has a limited amount of time to roll the investment into a new property. Low interest rates for loans are another driver for the market.

"Land has been a good investment, if you look at what people bought in the 1990s," Weishaar says. "There's a feeling out there that this will just roll on forever, and people will want to get in and take advantage of all of this appreciation."

Weishaar is skeptical.

What goes up

"Highs and lows are just part of life," he says. "I can remember Dad's operating note hitting 18 percent interest. Every time I've sold $1 per pound calves, I remember times they've sold for 60 to 70 cents."

Still, Weishaar says, North Dakota land values still probably are a bargain to the outside buyer. "North Dakota is really kind of a last outpost, compared to other places."

The downside to that is it makes it more difficult for young, local people to get started, or for people wishing to expand their farms and ranches - even when cattle prices are high and high-quality wheat can sell for $4 a bushel.

"I've always felt that, living in North Dakota, we don't really know what 'big money' is," Weishaar says. "When you get out of this area, it's amazing the amount of money some people have. They'll lay down a quarter-million dollars to buy something, while most farmers would take their whole lifetime to pay for something like that."

As the farm and ranch population ages, there will be more producers selling.

"For the most part, producers don't have IRAs or savings programs set up," he says. "Basically, when they reach retirement, if they don't have a family member taking over, their value is in their land. You can't blame a producer for trying to get top dollar when they've put their whole life into it."


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## Matt Jones (Mar 6, 2002)

1031's are going to really screw a lot of people. :eyeroll:


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## always_outdoors (Dec 17, 2002)

If you do some searching on the web, SD has done some preliminary work on this subject. Right now there is some research, but more needs to be done on this very subject.

We will see it here too. Land along the Missouri River north of Bismarck has already seen some land sales over $1500/acre. It will be surprising what will happen in 2007 when CRP comes out. I think we are all going to be shocked.


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## always_outdoors (Dec 17, 2002)

I would also add that this is going to be a problem for us residents and for the guides here in ND.

Our wonderful state legislature has no idea what is coming in the next two years. Sometimes the lights are on, but there just isn't anyone home.


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## Dick Monson (Aug 12, 2002)

No kidding, it's like bouncing marbles off concrete.

The legislature put prohibitions on land ownership by aliens, nonresident corporate farms, and nonprofit agencies. To protect financial and real estate resources for ND's people. Then they facilitate the land sales for nonresident hunting. Go figure.

ND Farm Bureau rails against permanent conservation easements and then promotes permanent landownership transfers that transfer the income from the land right out of the state.

Must be hard to sleep at night when you don't know which side of the bed you are supposed to be on.


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## Bobm (Aug 26, 2003)

> 1031's are going to really screw a lot of people


No 1031's keep the feds from screwing people out of their hard earned money. They are not the problem.



> The legislature put prohibitions on land ownership by aliens, nonresident corporate farms, and nonprofit agencies. To protect financial and real estate resources for ND's people. Then they facilitate the land sales for nonresident hunting. Go figure.


Dick is there somewhere I could read about these prohibitions? And could you elaborate on how they are facilitating the sales. PM me if you don't want to post it. No point in advertising for the dark side :wink: 
Thanks


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## always_outdoors (Dec 17, 2002)

I heard a bunch of farmers the other day talking at the Cenex station. Said they can't wait to pick up "cheap" CRP land when it goes out in 2007. I asked how they thought it would be "cheap" and they replied that all the old retired farmers will have to sell the land since they can't re-enroll into the program.

I think they will be shocked to see what kind of prices those "cheap" CRP lands go for in 2007 if all/some of that land comes up for sale.


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## SiouxperDave25 (Oct 6, 2002)

SnakeyJake1 said:


> 300 acres of prime deer hunting land that sold for over $300,000


I'm sure the landowner that sold was very happy.


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## rodfarva (Feb 17, 2005)

I think snakeyjake is talking about the same land that is only about 4 miles south of my house. It was i think 375 acres for 350,000. Almost 1,000 dollars an acre. The land there is great for whitetail deer which they are gonna turn it into a hunting preserve. But if they wanna keep the bucks there i hope they fence it in with 10 foot fences cuz just below it in the valley along the river is some good government land open to public hunting.


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## Osprey (Jul 6, 2004)

Okay, get ready, 'cause I'm going to give you the view of an outsider looking to get in. 

Have spent up to two months each winter in ND over the past 3 years and love the state and the people. But I can tell you that word is getting out, and prices are going to go up, so you better buy while you can.

I'm not a rich guy. I work 6 1/2 months of the year for the State of MD, get laid off in the winters and go hunting and probably only average mid-20's income even with a BS and an MA. But I live in an area where property is EXPLODING! Nice 2-3 bedroom houses in my town, on 1/4 acre lots, are going for up to and over $300,000. More if on the water. I've still got a good chunk of my family's farm on the water, but just up the road from me a 36 acre section on the water, all but an acre of it too low for anything but swamp pines, is on the market for $2.5 million! Anybody who's gotten used to that thinks place like ND are the promised land when it comes to real estate and will pick up houses and property just on speculation. I'm looking at tracts out there myself, for hunting and hopefully to move out for good in a few years.

It's going to change things for all of you, probably not for the better, but it's coming. All you can do is prepare as best you can. We tried to stop it here, and even with the ally of things being too low to do much with it's still going up and up. They don't make any more land, it's always a good investment and people will always be buying.

Your biggest ally is the cold. That's the thing keeping the weak out now.


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## gandergrinder (Mar 10, 2002)

The reality of the situation here in ND is that agriculture may not be the highest and best use of the land. It is pretty obvious to most in the farm business that some of the prices being paid are not in line with crop and cattle prices, which should, when ag is the highest and best use, drive land prices.

We may be headed for a market crash but I don't think we are yet. Prices are now approaching the all time high of $530 per acre that we saw in 1981, however in constant dollars, current values are about one-half the of the levels in 1981.

Right now there is a ton of low interest money floating around and you have people cashing out gains in other parts of the country, as someone pointed out before, and buying other places (ND). When the interest rates go up, and they will. Things are going to cool down.

The market will correct itself. The problem is that most people are still thinking in terms of ag land values. People are not buying some of these properties as ag investments. They are investing for recreation. We are not comparing apples to apples here.


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## Bob Kellam (Apr 8, 2004)

GG wrote

"The reality of the situation here in ND is that agriculture may not be the highest and best use of the land."

I think you may get a pretty stiff debate from farmers in the eastern valley region.  If the wetlands in the east were ever returned to circa 1850 levels, the valley would be the duck hunting capitol of the world! it isn't going to happen.

The area in and around the Coteau, AKA the PPR is where the land prices are going to rise due to significant recreational investments, the high plains will also see an influx. Having grown up in that region it is very good farm land if the right weather conditions happen at exactly the right time, and you like to pick rocks in some areas! :lol:

Like the article said farmers are selling and then renting it back. that will continue perhaps even with market fluctuations. IMHO 1031's are going to escalate until they are no longer a viable means to shelter excess cash.

Just My Two Cents.

Bob


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