CALGARY – Intense demand and short supply for farm land in Alberta has caused bidding wars similar to what Canadaâ€™s hot housing markets have experienced this year, says the RE/MAX Farm Report 2014.
That has left many family farmers ready and willing to make a deal at a momentâ€™s notice.
The report, which was released Tuesday, said tile drained land has sold for as much as $10,000 per acre in southern Alberta this year, which represents a 20 per cent increase over the previous year.
â€œThe value of scrubland and other non-productive land in Canadaâ€™s most prosperous province also climbed, buoyed by demand from well-off urbanites seeking the tranquility of the countryside,â€� said the report.
It said the western Canadian farm land market remained strong, driven primarily by Alberta, where there is intense competition for agricultural land and parts of British Columbia, where prices are the highest in the country.
â€œWestern Canadian farmers and their families continue to display resilience, surefootedness and enduring optimism,â€� said Elton Ash, regional executive vice-president at RE/MAX of Western Canada, in a news release. â€œIntense demand and short supply in Alberta has caused bidding wars like we see in Canadaâ€™s hot housing markets.â€�
The report said prices per acre in Central Alberta have risen from $3,400-$6,500 last year to $4,500-$7,500 this year.
â€œHigh demand and low supply continue to define central Albertaâ€™s agricultural real estate market,â€� said the report. â€œWell-financed farmers are eager to expand existing operations. Demand for recreational land (is) increasing the price for marginal-quality farmland. Values for farmland in central Alberta continue to be very strong as listings remain scarce. This trend often benefits sellers.â€�
The values speak to the robustness of the provinceâ€™s economy and to the frontier mentality drawing ordinary Albertans onto the land, said RE/MAX.
â€œCentral Albertaâ€™s tight sellerâ€™s market is expected to continue for the foreseeable future. Farm land listings during this market cycle are expected to remain scarce,â€� added the report.
In southern Alberta, prices per acre have risen from $800-$8,500 in 2013 to $1,000-$10,000 this year.
â€œAbove-average yields and low inventory (are) contributing to (a) sellerâ€™s market,â€� said the report, adding many established family farmers have the means to purchase land and a favourable environment for sellers is expected to continue for the foreseeable future.
â€œPotential purchasers in Albertaâ€™s fertile south find themselves in a market characterized by low inventory and intense competition among fellow buyers,â€� it said.
Buoyed by above average yields and favourable prices for commodities including wheat and canola, many owners have found little incentive to sell, added the report.
Allan Fox, realtor with RE/MAX Real Estate in Lethbridge, said it comes down to a supply and demand issue and there is a shortage of land â€œwhich in turn drives up the prices of property.â€™
â€œEventhough the price of grain is starting to fall, there still is the family farm operation that would like to add to what they have,â€� said Fox, adding that the cattle market is the strongest itâ€™s been for a couple of years and therefore people are looking for more land for their cattle.
He said the high demand has been around for the past two years.