Rural Real Estate Revolution
In the past, farm properties were typically passed down through generations. While this is still true for many, an increasing number of farmers find themselves without any family members interested in continuing the operation. This coincides with an upswing in urban and suburban residents seeking green space for their families, a slower pace of life and a place to grow their own food.
“The pandemic brought about significant changes in American culture and society,” said Chris Pickens, lending officer at Compeer Financial. “During lockdown, remote work became the norm, prompting people to rethink their work-life balance, priorities and how they want to raise their children.
“Newcomers to rural areas, who have no prior experience with this environment, are looking for ways to acquire more property with the same amount of money,” she continued. “They want the ability to work remotely, enjoy more leisure time and get away from the hustle and bustle.”
Farm Properties Transition
Although current interest rates are higher than they’ve been in recent times, they are nowhere near as high as they were in the ’80s and ’90s. Older buyers remember mortgage rates reaching 12% or even higher, making them less intimidated by today’s rates.
According to Pickens, “Younger buyers are generally less willing to borrow at higher rates. Younger clients who can’t find a property in their price range are opting to wait, which is a risky move given the low inventory we’re currently seeing in the rural property market.”
The limited supply gives sellers an advantage, allowing them to maintain their purchase prices and avoid working with buyers who have contingencies.
While interest rates are a top concern for many homeowners, Chad McGlothlen, director of lending at Compeer, stressed that rates shouldn’t be the sole determining factor. In other words, don’t pass up on your dream property just because you’re waiting for a specific rate.
“When you’re purchasing a property, you’re often saying it’s a property that you want to last forever,” he noted. “The interest rate is merely a reflection of time, and I wouldn’t advise someone to delay buying a house for a year just because they’re waiting for rates to decrease.”
Another growing trend Pickens has noticed is the amount of research buyers conduct ahead of time.
“As a general rule, buyers are not making hasty decisions,” Pickens said. “Increasingly, buyers are doing their due diligence to gain a good understanding of interest rates, available properties and precisely what they are looking for.
“I’m also seeing a more practical approach to purchasing rural properties,” she continued. “More buyers are looking for potential farm income and opportunities to grow their own food. Having control over where their food comes from is a huge influencer on these urban transplants.”
That’s why it’s important to thoroughly research and understand your options. You don’t want to get stuck with an adjustable rate or short-term mortgage with little flexibility.
Buying a rural home at any time presents its own set of challenges, but investing a little time and effort goes a long way. Working with seasoned professionals, conducting thorough research in advance and identifying your priorities will help you find the right country home for your family.
This article was originally printed in the Fall 2023 edition of Compeer Financial's Cultivate magazine.