To some people, Montana means Big Sky or one of the other resorts in the state; to others it is a small city like Bozeman or a wide spot in the road such as Ringling, but often it is the land and the characteristics of it that draws people to a location.
The outdoor recreation and privacy offered by a property, play a large role in the selection process, but recently agricultural production and a return on investment are criteria that are becoming more critical in the selection of a ranch or recreational property. That is not to say that price, proximity to an airport, town, amenities, ease of access or improvements have decreased in importance.
Pricing for recreational/ranch properties are closely tied to commodity prices, privacy, inventory and the “neighborhood”. Properties located in high demand locations such as the Rocky Mountain Front, Gallatin, Madison or Yellowstone valleys are often listed and sell at prices higher than the statewide averages.
The market for recreational or ranch properties has been generally increasing since 2009, which was the low point in the recent market, both in terms of sales volume and amount of land sold. In the past several years, just taking data from the Southwest Montana Multiple Listing Service; during 2013, fourteen sales, of properties in excess of 200 acres, were reported with a volume of almost 30 million dollars. In 2014, there were 21 reported sales with a volume just over 51 million dollars. During 2015, 15 sales were noted generating close to $39 million dollars. Keeping in mind that most ranch or recreational sales occur in the summer and fall, 2016 appears to be off to a strong start with nine reported sales totaling about $15 million.
In conducting research in another database for similar properties it appears that statewide, there is approximately $28.5 million in pending sales at this time.
In evaluating ranch and recreational sales pricing, properties with high amenity values such as “private” fishing water or abundant big game tend to still sell at the highest values on a per acre basis. Differentiating between different portions of a property that have a high amenity value (water influenced for example) often becomes somewhat of a challenge, determining where that influence begins and stops. If a property has high caliber fishing amenities, even when considering large property sales, the values can range between $7,000 and $20,000 on a per acre basis.
Montana is an arid state, so the value of water for production purposes also creates higher prices on a per acre basis. Pivot irrigation typically ranges between $3,000 and $5,000 per acre which is on average is twice as valuable as flood irrigated land. Sub-irrigated land and meadow land are usually valued higher than dry crop land, alpine or mountain pasture; native range typically being valued at the lowest level generally between $600 and $900 per acre.
High quality big game hunting as well as privacy and agricultural production, whether that production is in the form of cattle, hay or grain production also generates higher sales prices. If a property can cover all of its costs of operation and kick back some cash at the end of the year the property will generate more interest from the widest spectrum of potential buyers.
Over improvement on a ranch or recreational property tends to generate less interest from buyers as that “dream-come-true residence”, barn, skeet range or tennis court quickly becomes a nightmare with the preponderance of potential buyers; it simply does not meet their dreams or expectations.