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LAND OWNERS HEAR POSITIVES FROM APPRAISERS
By Reed Fujii
Record Staff Writer
April 29, 2006 6:00 AM
San Joaquin County farmland prices are on the rise, part of a statewide trend of "dramatic increases during 2005," California farm appraisers reported.
"There's not a lot of bad news," said appraiser Tony Correia in an address before the California Farm Managers and Rural Appraisers meeting in Visalia this week.
Produce and almond prices have weakened, but the almond prices remain good and growers profitable. Other plus factors:
» A weak U.S. dollar makes California farm products cheaper for foreign buyers and boosts the cost of imported goods.
» Interest rates, while rising, remain low by historical standards.
» There's a lot of demand from farmers and others who sell property at high prices for urban development but seek other land in exchange to avoid a big tax hit.
Farmers seeking tax-free exchanges comprise a major factor in boosting Central Valley land prices, even beyond their value for producing a crop, said Jeff Lein of Edwards & Lien Inc. in Hilmar.
"We've already surpassed the economics of agricultural land," he said Friday in a telephone interview.
There's very little land available for sale compared to the number of farmers and others seeking property for a 1031 exchange, which refers to Internal Revenue Code section 1.1031 that allows owners of certain types property to sell it and buy other "like kind" property without paying capital gains taxes.
"As long as we have this trend that we have a lot of trade money out there, I don't think we're going to see a softening yet," Lein said.
There's also little sign that urbanization of farmland slowing as cities seek room to grow.
"It is a Valley-wide trend that most municipalities, whether they are unincorporated towns or incorporated cities are addressing their general plans aggressively," Lein said.
Correia, a principal of Correia-Xavier Inc. in Fresno, said Friday by telephone that the California's strong overall real estate market is driving demand for agricultural lands.
"People are buying land even if crops are not making that much money," he said.
Farmland buyers are not always farmers, either, he said. Often they are investors, real estate developers or, again, people seeking 1031 exchanges.
"A lot of the market in California of what we used to consider agricultural land, these small orchards and vineyards, are essentially becoming rural home sites," Correia said.
Those trends are evident, too, in San Joaquin County.
The farm appraisers' annual report, 2006 Trends in Agricultural Land and Lease Values, cited rural home-site and urban development as a factor in most areas of the county.