Recreational Land Value Trends
Recreational Land Value Trends
Change is in the air in the rural real estate market. Here at Compeer Financial, I closely follow the rural real estate market in the southeastern corner of Minnesota; specifically, Winona, Fillmore, and Houston Counties. This corner of Minnesota is home to some of the most beautiful country the state has to offer. It can change from flat farmland to rolling bluffs in a heartbeat and is home to many vibrant rural communities rich in rural culture and tradition. This incredible part of Minnesota has experienced notable changes recreational land values over the past year.
Rural Southeastern Minnesota is home to a diverse real estate market with many new and exciting aspects that are driving real estate values to “unprecedented” heights. Traditional cropland, recreational destinations, alternative energy, long-term investments, and even entertainment venues are some of the influential uses that are pushing these values higher. Conventional farming and recreation are still the most demanded uses in this area.
It has now become common practice for those marketing these properties to survey off the recreational acreage to be sold separately. This has substantially increased the amount of interested buyers in something that was once considered rough ground with minimal value. More and more often, non-traditional rural land owners are purchasing recreational land for a place to hunt, fish, vacation, etc. The main factors that affect value on these properties are water sources (trout streams and rivers are found throughout the area), the quality of trails, physical access throughout the property, and existing building sites (which eliminates the need or work involved with obtaining a site eligibility from the county).
The most common type of recreational property in the area is rolling woods. This is the base of the market. From there, any additional characteristics are, of course, a plus. Improving trails and having tillable acres to be used as a food plot or rental income can be important but the most desired characteristic is a water source. The highest recreational sales are the ones along a trout stream or river and have a site eligibility. They rarely are listed for sale so when one comes up, it’s going to sell high.
Below is a graph of the advertised recreational sales from this market area in both 2020 and 2021. Something to observe is that typical land values in 2020 were in the range of $3,000 to $4,000/acre. With the increase in demand and better marketing of these properties, values have certainly increased in 2021. Looking forward, the trend line is indicating values to be closer to $5,000/acre this year. That’s in the ballpark of a 20% increase per year! Who needs a 401K?
This trend of increasing values is expected to continue for the foreseeable future. There have not been signs yet of the market slowing down. If you are planning on selling a recreational property in this area, utilizing a real estate company that specializes in selling recreational land is key. There are multiple companies in the area that are doing a great job in getting the right people connected to keep these properties selling as well as they have. If you are interested in purchasing a recreational property contact these same real estate companies and tell them what you’re looking for. Our Home Mortgage Team has the expertise and experience to guide you on your journey as you consider financing options.
If you are interested in receiving any appraisal services, please feel free to send me an email or give me a call at (507)649-9164. Another great resource is the Appraisal Services page on our website. There, numerous articles from our appraisal staff can be found along with our contact information.