Slow real estate sales plague ag industry

By Argen Duncan: Freedom New Mexico

Much like the rest of the country, the market for agricultural land in eastern New Mexico is lagging, say local real estate agents.

Charles Bennett of United Country Vista Nueva Inc. said during economic downturns, land quits selling. Bennett said when market starts coming back, sales are so scattered that it’s difficult to tell what the market is really doing. He said the area that includes Portales is experiencing just that situation.

“There’s very little land trading hands right now,” Bennett said.

Sales slowed late last summer, he said.

Buena Vista Realty agent Jack Merrick said he has been able to find buyers for his client’s land, but the market is slower than a year ago because milk prices have dropped and pressured the dairies.

Low milk prices have decreased the sale of irrigated land because dairies are no longer expanding, Bennett said. Tightened credit requirements also affect property values.

Merrick said the drought has hurt the dryland market as well.

Land buyers are nervous and watching the economy to see what happens before they purchase anything, Bennett said. He expects people will begin reinvesting if Congress stops cap-and-trade carbon emissions legislation and the proposed federal health care program.

Still, Merrick said some people have money and would rather invest in land than the stock market, so they buy.

“It’s just estimating what the fair price is right now,” he said. “Both sides are being tough negotiators.”

Bennett estimates that land prices are probably down 15 percent to 20 percent, but the few sales make it hard to be sure.

Bennett said predicting the land market is “not an exact science.”

“The land market, it’s a complicated thing, and every piece of land is unique, and different factors go into every piece,” he said.

Bennett said previously unknown factors in the agricultural land market could eventually show up.

As signs of a positive direction in the recession, and therefore the land market, Bennett pointed to the stock market going up a little and the credit crunch loosening a bit.

“There are some signs of hope out there,” he said.

Merrick expects dryland field sales to be depressed for the rest of the year because of the lack of rain last year and early this year, and he said it didn’t look like dairies would see relief until the beginning of next year.

“But we will survive,” he said.

Bennett has worked in real estate for 25 years and seen two or three recessions. He said land markets take three to five years to return to pre-recession levels once they start rising again.