Farmland values are an essential indicator of Canada’s health of the land market.
That’s why it’s important to explore recent trends in farmland values across Alberta and other provinces to better understand how farms and ranches are valued for sale in the area.
We will also highlight some of the factors influencing these value changes.
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National Farmland Value Trends
For the past three years, Canada has endured the economic effects of the COVID pandemic, extremely volatile weather, and supply-chain issues. Yet the nation’s farmland value remains resilient with modest gains.
Canada’s farmland value increased from 5.4% in 2020 to 8.3% in 2021.
Key elements such as steady demand, historically low-interest rates, reasonable commodity prices, and a limited supply of farmland for sale have contributed to this increase.
Ontario and British Columbia farmlands lead the pack with 22.2% and 18.1% gains, respectively. While New Brunswick with a 5.2% increase and Alberta with a 3.6% growth tail behind.
The severely dry weather has hampered yields of farmlands across the provinces, but irrigated lands were spared from the harsh drought.
Recap: Factors That Affect Farmland Values
The value of farmlands and ranches for sale in Alberta is influenced by several factors, such as
Supply And Demand
Like all commodities, farmland value follows the law of supply and demand. An increase in land value results from an increase in demand and a shortage of land, resulting in a surge in farmland prices.
Interest Rates
Low-interest rates make borrowing more accessible, which stimulates buying power. When interest rates increase, fewer people can afford rural land purchases.
Outside Investors
An influx of non-farming investors looking to diversify their portfolios can increase rural land prices. They can also influence the land rental market. This encourages local farmers to rent instead of purchasing their own plots of land.
Farm Revenue, Price, And Rental Rates
Farm revenue influences price and rental rates. By looking at these figures, you can determine your current market conditions and predict the outlook of your property.
Productive Value Of The Farmland
For a potential investor, valuable farmland shouldn’t just be bought at a reasonable price. It should be generating income and should have a potential for growth in the future.
The Farmland Value Trends In Alberta
Despite the effects of the pandemic and erratic climate, Alberta’s farmland values grew moderately, with a 6.0% increase in 2020 and a 3.6% gain in 2021.
While most drylands from other provinces suffered low yields from the severe drought, Alberta farmlands managed to neutralize this due to the high commodity prices. Most transactions also took place before the drought.
The range of values per acre for rural properties is quite broad. Lower-priced vacant land experienced a significant percentage increase, which resulted in a slight rise in per-acre prices.
Southern Alberta Exceeds Expectations
Farmland value increased by 6.2% in 2021 because of land base expansion. The producers were likely convinced to expand to meet the demands of essential goods like root crops.
The need for irrigated lands is also a critical factor in this growth. The value of irrigated land in Southern Alberta grew to 10.7% this year.
Peace Region and Northern Alberta’s Appreciation Rates Slow Down
The Peace Region, with a 3.6% increase, and Northern Alberta, with a 1.5% growth, clearly only experienced a slight increase in 2021.
There were a few vacant farmlands put for sale in the Peace Region. Most of the increase in value happened in the northernmost part of the region.
Northern Alberta produced modest yields but was still under par compared to the areas. The area’s unpredictable weather might have also driven potential buyers away.
Competition Fuels Increase of Central Alberta’s Farm Land Value
Last year, farmland value in Central Alberta increased by 3.5%. Vacant rural lands in the northeastern area attracted the most interest, which ignited tense competition. The particular corner of the region had diverse buyers, supply-managed farms, and crop producers.
Farmland Values Change, But Good Land Deals Are Always Out There
Overall, the farmland value trends in Alberta have been stable despite the persistent issues posed by the pandemic and climate change.
The farms and ranches for sale in Alberta have been affected by different factors in the market. However, this is also an excellent opportunity to find suitable land deals and invest in farms with the right potential for long-term growth.
Ultimately, buyers should consider a farm site’s terrain, location, and productivity. These factors will determine whether the purchase would be an excellent long-term investment.
Whether you’re looking for farmland or plan on selling one, Hansen Land Brokers is here to help. We can guide you through the unpredictable market trends and buying process. Contact us today to get started!
