Why Okanagan farmland prices continue to soar
WITH LITTLE ON THE MARKET, FARMLAND UP AND DOWN THE VALLEY IS A HOT COMMODITY.
OKANAGAN - Whether it's used to grow cherry bushes or graze dairy cows, farmland in the Okanagan is a hot commodity.
Recently released real estate figures show a huge jump in the price of Okanagan farms in the last year, and while the statistics may not paint a totally accurate picture, realtors specializing in farm sales say the market is definitely very strong.
Statistics released by the Okanagan Mainline Real Estate Board show the average price paid for a farm in the Central Okanagan at $1,750,000 in the first quarter of 2019, an almost 50 per cent increase on the average price 12 months ago at $1,170,000.
The numbers in the North Okanagan show a 27 per cent increase over last year, with the first quarter price at $2,370,000 compared to the first quarter of 2018 at $1,867,500.
The figures don't paint a true reflection says B.C. Farm and Ranch Realty realtor Gordie Blair, although he say he's had a busier first quarter this year than anytime in the last 15 years.
"Sales are up, prices are up," Blair says. "It's just taken off."
Blair, who sells agricultural land from Kamloops to Cherryville, said farm sales statistics can fluctuate greatly because the market has a tiny fraction of sales compared to the residential market. This means one or two large multi-million dollar farm sales can throw the numbers off easily.
As to why the stats show that farms cost more in the North Okanagan than in South Okanagan, Blair says the size of properties in the north of the valley are generally much larger than in the south - hence the higher price. When you look at the price per acre, southern Okanagan farmland is far more valuable than land in the north.
However, Blair says prices across the North Okanagan and Shuswap have been growing firmly over the last few years with buyers coming from the Okanagan as well as the Fraser Valley, Alberta and Saskatchewan.
Whereas good quality irrigated farmland five years ago would sell for $12,000 an acre, the price now can reach $20,000 acre, says Blair.
He admits he can't explain exactly what factors led to his busiest quarter in over a decade, but it indicates a strong market.
Vernon based Royal Lepage Downtown Realty realtor Pat Duggan agrees with his colleague and says prices started to increase about three years ago and haven't stopped climbing, making the market throughout the North Okanagan and the Shuswap very robust.
"If you have good quality irrigated land, it will demand a high price and probably sell relatively quickly," says Duggan.
The realtor who sells farmland from Lake Country to Salmon Arm says sky-high prices in the South Okanagan has led to some orchardists heading to the north of the valley.
"Compared to what they're paying in the south, it still looks like a bargain to them," he said.
The influence of orchardists heading north to farm has put pressure on the dairy farms and ranches in the North Okanagan, pushing prices up, said Duggan.
While North Okanagan farmers have seen the price of land increase, according to Royal LePage Kelowna realtor Andy Sandhu a recent demand for cherries, coupled with a new trade agreement, has pushed prices in Central Okanagan farmland even higher.
Sandhu said orchards with decades-old apple trees fetch around $100,000 an acre in the Central Okanagan, while orchards with newer apple varieties can sell for between $130,000 and $140,000 an acre.
"But if the same farm has cherry trees you're talking $150,000 to $175,000," Sandhu said. "The price is getting higher because we don't have too many farms for sale," he adds.
Regardless of where the pressure is coming from, all three realtors agree they don't see the situation changing anytime soon.
"The bottom line is less land, less good quality farmland, and more buyers for it, you're going to see that pressure continue," Duggan said.
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