Rural areas are experiencing a trend where farmers and investors are buying up and consolidating properties to create larger, more "efficientî farms, said a real estate expert at the University of Alberta.
And a local real estate agent said he believes that trend is part of the reason real estate sales in Mountain View County improved in 2012 compared to previous years.
David Dale-Johnson, the Alberta School of Business's Stan Melton Chair in Real Estate at the university, told the Gazette he is seeing a great deal of consolidation in Alberta's rural areas to create larger, more efficient cattle and crop farm "entities.î
"So investors with large ownership of acreage are adding to their portfolios and bigger for them is generally better,î he said.
Glenn Christiansen, a realtor at Widmer Realty Ltd. in Olds who focuses on sales throughout Mountain View County, said not surprisingly, growing confidence in provincial, national and global economic conditions are behind the move by many farmers and investors to buy more land and the trend will likely continue for the next several years.
"Alberta still has been very, very strong and if you factor that in with higher prices for grain and a better market for cattle, I think people are expanding their operations,î he said.
When asked why larger farms are, as Dale-Johnson said, more efficient, Christiansen provided the example of how expanding a cattle farm would be beneficial.
"If you're running cattle, you've got more land to graze with. You've already got the equipment already, so you might as well put it to use.î
The number of acreages sold in the county since Jan. 1 of this year, at 10, matches the total number of sales for the same period last year, Christiansen said.
He added it's a marked improvement in land sales over 2011, when the total from Jan. 1 to the beginning of February was five.
According to Calgary Real Estate Board statistics, there were 156 sales in the county overall in 2012ó including agricultural, residential and commercial salesó compared to 107 the previous year.
"There's probably been some land that's sold this year too, but some of it is selling privately because (sellers) are selling to neighbours,î Christiansen said. "But generally we have seen a pickup in acreages and land sales over the last couple years, no question.î
As for what's selling, he said most of the acreages sold in the county so far in 2013, were smaller parcels.
More "bare land,î or larger properties without homes, has sold since the beginning of 2012, Christiansen added, and he has also seen slight increases in sales of larger properties with and without homes on them compared to 2011 and 2010.
Properties closer to towns, especially Olds, are selling better than more rural properties, he said, as the quality of the land is better and buyers want to be closer to services.
And most of the buyers are existing farmers looking to expand their operations.
"But we're seeing some people come out of the urban areas and want to build a home on a piece of property,î he said, adding those people are mostly from Calgary and they are looking for recreation or hobby farm opportunities, especially in the Sundre and Water Valley areas.
"They're basically bringing some money out to buy some land so they can go fishing and quadding. I wouldn't imagine a guy from Calgary to come out and become a farmer.î
Other people are buying properties as investment opportunities for when the land increases in value.
Prices are increasing for properties in the county, with the average sale price in 2012 at $419,879, compared to $394,649 the previous year.
Christiansen described 2012 as a year of "static and stableî pricing, with bare land prices gradually increasing.
He forecasts a "strong marketî for sales in 2013, especially due to the demand for larger pieces of property, and a trend of increasing prices.
"I honestly think the demand is probably bigger than the supply right now and that will drive up some prices. That's all based on location and quality too.î
Right now, he said, the average price for a smaller parcel, such as properties under one hectare in size, ranges from $110,000 to a little more than $200,000 and there is a large supply for such properties, but "little demand.î
Larger properties, such as quarters, which are nearly 65 hectares in size, range from $375,000 to more than $475,000.
Dale-Johnson said prices for finished farm acreage will likely continue to increase for the next several years.
But, he added he is a "little bit nervousî about giving a rosy forecast for 2013 due to concerns about the provincial deficit and international markets for Alberta's oil.
"And the answer to that is not clear at all. And the other piece of this, at least for the near term, the U.S. (They), through more creative exploration and oil and gas recovery practices, are saying they're self-sufficient. So that also has implications for us.î
"Alberta still has been very, very strong and if you factor that in with higher prices for grain and a better market for cattle, I think people are expanding their operations," Glenn Christiansen, realtor with Widmer
