The Montana Ranch Market, Fall 2023

As forecasted earlier this year in Market Update: 2023 Montana Land Values, sales volume of Montana ranches in 2023 has been far below the two previous years. With a record number of transactions in 2021 and 2022, the year began with one of the smallest inventories of Montana ranches for sale in decades. Simply put—less inventory for sale, equals less sales.

Landowners that were considering putting their property on the market likely did so in 2021-2022—when prices and demand were at record breaking highs. Covid-19 created a real estate boom in Montana, furthered by the continued romanticized portrayal of ranch life in media. The unprecedented demand created for Montana property led to record breaking sales, including two of the largest ranch transactions in Montana history. The increased number of sales transactions drastically reduced the number of properties on the market heading into 2023.

Despite the limited inventory, demand for Montana ranches has remained strong throughout the year. Buyers continue to seek Montana properties for recreational use or as an investment strategy. Ranch real estate prices have stayed in line with 2022 levels, reflecting the inventory shortage as well as elevated seller expectations. However, the market seems to be leveling out and price reductions were prevalent in Q2 and Q3. According to appraiser Andy Rahn of Montana Land Source, there is a noticeable gap between list prices and sale prices. In a recent Progressive Farmer article, Rahn noted:

“The median list price is $2,318 per acre right now — about 15% higher than 2021 listing prices. But the median sale price in 2023 is $1,288 an acre, down 33% from the 2021 highs. That’s a spread of $1,030 an acre between the median list price and the final sale price.”

The Montana ranch real estate market is likely stabilizing—with land prices not likely to change significantly, but to slowly get closer to pre-pandemic values. Of course there are exceptions, especially for ranch properties that are exceptionally large, unique or offer unparalleled amenities. Typical buyers for this type of listing pay cash and are less sensitive to interest rates or other conditions that drive prices. If a listing is one-of-a-kind, there is no limit for the right property—evidenced by several notable ranch sales in 2023. These high value transactions are in contrast to the gentle downward pricing trend and are often harder to track since many are transacted off-market.

As pricing adjusts to meet current market conditions, there may be an increase in sales volume on the horizon. Good news for both buyers and sellers, but the question remains, will more properties come on to the market in 2024? Western Ranch Brokers Caleb Campbell anticipates that  we will see inventory levels begin to recover over the next 6 months:

In 2023 we are seeing the inevitable transition to a more stable land market. Buyer demand is still very high for larger and recreational oriented properties. High-net-worth cash buyers are still prioritizing Montana ranches as an addition to their investment portfolios. With a volatile stock market and high inflation, buyers of all calibers still see land as a safe harbor investment.

Western Ranch Brokers suggest the following for buyers and sellers who are navigating the current market:

Buyers

• Prepare a list of your must-haves for a ranch property. With the tight inventory and relatively high prices you may not be able to find a property that meets every one of your needs/wants. Know what you can and can’t live without.
• Don’t be afraid to negotiate pricing. Although the market is still very competitive, as pricing stabilizes and the market slows down, sellers may be more willing to accept a lower price—especially if the property has been on the market for a while.
• Keep an open mind. With fewer ranches on the market, you may need to visualize the potential of a property rather than expect to find something that is move-in ready. For example, a property that is currently a working ranch might have great recreational value or potential building sites for new improvements.

Sellers

• Set realistic expectations. The 2021-2022 market was out of this world, but market conditions are changing. If you are serious about selling your property, work with your broker to determine the current market value of your ranch. You will attract more buyers and reduce the number of days your property is on the market.
• Play to your audience. Many ranches have a variety of amenities, and it’s okay to market some or all of them. If you own a cattle ranch, but have great on-property hunting, you may be more successful by emphasizing the sporting value vs. the operational value.
• Sell now, versus later. Economic indicators suggest that the last few years were the peak of the Montana ranch real estate market, at least for now. The ranch market may be slowing down, but land values are still at record levels—now is the time to sell while land values are high.

If you’re considering buying or selling a ranch in this competitive market, Western Ranch Brokers has the experience and market knowledge to help you successfully navigate any transaction. Contact Western Ranch Brokers for more information and to learn how we can go to work for you.