IS THERE STILL ROOM FOR RANCHERS IN MONTANA?
Known for a bigger population of cattle than people, Montana’s wide open spaces are getting a lot more crowded. Often referred to as “The Last Best Place”, Montana has attracted people over the decades thanks to its endless skies, excellent quality of life and endless opportunities for recreation. The last several years have brought more newcomers to Montana than ever before, impacting both the culture and cost of living in many communities. With an ever increasing population and the record prices of land, is there still room for ranchers in Montana?
Photo © ecoflight, ecoflight.org
The “zoom boom” during the pandemic and the attention from the popular television series “Yellowstone” have brought an increased number of out-of-state buyers with deep pockets to cities like Bozeman, Missoula and Kalispell, sending real estate prices to record heights. The median cost of a single family home in Bozeman is now around $812,000, leaving many longtime residents priced out of the place they call home. Increased traffic, more luxury shops and restaurants, and a lessened sense of community are just some of the changes that have made former cow towns like Bozeman unrecognizable to locals. As real estate inventory shrinks in the more metropolitan cities of Montana, even the smallest communities in Montana are facing increases in population and prices.
The ranch real estate market has been similarly affected by an influx of wealthy buyers—creating the most competitive seller’s market in decades. The record sales of Montana farm and ranch land in 2021 have created a very tight inventory of ranches for sale—with demand and prices remaining at all time highs through the summer of 2022. While most out-of-state buyers are looking for property for recreational use only, they are still willing to pay a premium price for a working operation that fits their desired location—keeping competition and prices high for every type of ranch property. This is great news for ranch owners looking to sell, but creates new challenges for those still operating in the farm and ranch industry.
Sellers looking for a replacement property or to add more acreage to their operation might find current land prices above budget. The ever-increasing cost of living in Montana also makes it difficult for employees to afford to live where they work—impacting the available workforce. Families planning to pass on ag operations to the next generation may face high estate taxes, thanks to newly inflated land values. With increasing operational costs, property values at an all time record, and widespread climate changes—can the agricultural community that has been the backbone of Montana for generations survive? Western Ranch Broker’s Caleb Campbell notes that:
“As a 4th Generation Montanan I can still remember stories of the ‘old days’ when Montana was ‘undiscovered’, ‘too remote’, or ‘too-cold’ for wealthy individuals and non-agricultural buyers. Back in those days the value of land was nearly exclusively related to its ability to produce some commodity whether it be cattle, hay, grain, grass seed, timber, etc. Jump ahead to the current real estate climate in Montana where certain portions of the state are almost exclusively valued for non-production qualities like serenity, security, investment, and recreation. As with all things, it seems change is the only constant variable, and with change comes new opportunities.”
Montana’s ag business represents close to $5 billion in gross revenue annually, the state’s largest industry. According to the 2020 state agricultural report, 58.1 million acres of Montana is farm or ranch land.
The need for agricultural production isn’t likely to slow anytime soon, especially with the rising demand for food – another result of the recent pandemic, extreme weather conditions and geopolitical influences. Farms and ranches will remain a crucial part of Montana’s economy and the world’s food supply, but only time will tell how many will remain in the communities that are experiencing explosive population growth. Whether owners will sell their property, relocate it or continue to operate in place, the farm and ranch community has survived many hardships, and is sure to persevere through these uncertain times as well.
Whether you’re thinking of selling or interested in buying, Western Ranch Brokers can help—our team of local ranch experts are familiar with the ever changing dynamics of the ranch real estate market in Montana. We share our knowledge and experience with our clients personally, helping them navigate the fast-paced and sometimes complex ranch real estate transactions successfully.
Contact us for more information on the latest status of the Montana ranch market and find out how we can go to work for you.