Farming in the Burbs

Traditional Farmer · Dec 17, 2020

Might want to rethink buying a farm way out in the country.Distant relatives and friends of mine just sold what was left of their farm a little closer into town than where I'm located.About 35 acres went for 7 Million$, developer is going to build townhouses that'll probably sell for close to a million each.I see the ones out my way are starting at $750,000 must be plenty of money around.

DRussell · Dec 17, 2020

Does Virginia have a farmland preservation program. Most if not all the farmland near me has been preserved so there is less development pressure.

Doug - Iowa · Dec 17, 2020

School me a bit on this please. What happens to property taxes in a case like that? I've heard multiple horror stories about this type of situation but really don't understand what is going on in the big picture. Say my field is zoned ag and the owner of the field across the road wants to sell for the $7M development. The county (or city) sees a big lump of tax money ready for the taking as soon as they zone it for residential. I would assume they could change my zoning from ag to residential and up my taxes? So now I can't afford the taxes, the developer offers me a $7M deal and I take it. Now the problem just moves to the property owner next to my ground? Add a little insider info sharing between the officials and the developers and it looks to me they got you no matter what. Not to mention the capital gains taxes and fees, so the property owner gets a fraction of the value, and the developer and government take the rest.

tomstractorsandtoys · Dec 17, 2020

The capital gains can be an issue but it is taxed at less than regular income and if you do a 1031 exchange there are no taxes untill you sell the second property or if you die and had a good estate plan your family can still get by without paying a huge amount of taxes. These type of deals need very good lawyers not just friend of a friend or internet chat room advice. We moved away from the DC suburbs many years ago and used a 1031 to trade a small place for a 160 acre farm. Tom

coshoo · Dec 17, 2020

In Washington, eligibility for ag taxation is determined by statute, and is immune from outside influences like $7 million condominiums next door. You can get ag taxation here as follows: 1-5 acres, gross ag income of $1,000 per acre. 6-20 acres, gross ag income of $1,000 for the parcel. 21 and up, no $ amount of ag income required, but parcel must be used for some kind of ag (giving free use to your neighbor to pasture his 2 steers in the summer is enough). If you cease ag use, you can take it out by paying the balance of the taxes you would have paid for the past 7 years.

NY 986 · Dec 17, 2020

Virginia, Mass, SE PA are all hot areas for development. Where I am in the Finger Lakes region even the Amish are picking up and moving on. But nonetheless the Amish and Mennonites are driving the farmland market. Prices have cooled a little from a few years ago when milk was 25 dollars per hundred weight and the Mennonites had visions of 50 cow dairies on every available farm. Too bad dad's father did not settle a little further south and west of here into Seneca Castle or Hall, NY on some of the most productive land in the US. As to development it is very sporadic where I am at. Even the Rochester, NY market finally tapered off from the run it had starting in the mid-1980's when the focus shifted from 4-6 person family homes to McMansions.

SHALER · Dec 17, 2020

Doug, every state is a little different I am sure. In my state the scenario you outline would not happen. If you ur property is in ag use and the field across the road from you sell for $200K/acre for housing, your zoning/taxes etc would not change from the benficial ag tax rates UNLESS you stopped farming it. Iowa if that is where you live,as I understand it is very farmer friendly relatively speaking, therefore I would think the scenario you mentioned would not happen there either.
TF, sounds like you had better start thinking about the next 5 years, 10 years, or whatever. The wave of development is coming and you cant escape (except as memtioned by the other poster if you are surrounded by ground in ag preservation program) if VA has one and im sure they do. Of course that is an option for you (selling an easement) among many others.

Doug - Iowa · Dec 17, 2020

Thanks. I'm sure Iowa has some sort of ag protection. I'm personally not in that situation and no growth is headed my way. But interesting to understand what others might be going thru. North of Des Moines you see ag ground being gobbled up one farm after another. Companies like Facebook and Amazon built huge facilities and then the housing going up around it takes even more. And not in terms of acres but square miles. I go that way maybe once a month and every trip I notice something is gone. If you see a track hoe sitting at a farm stead in that area, take a picture because it will all be gone next trip thru.

BarnyardEngineering · Dec 17, 2020

They could try jacking up the assessment, but they would have a hell of a fight on their hands around here.

Then again the taxes are based on the assessed value of the land not on what someone paid for it. Just because someone paid $7M for a 35 acre piece doesn't make it worth more than the $3000/acre it would bring around here.

The house is the primary determining factor in the value of a property. No million-dollar McMansion, no high-dollar assessment.

Traditional Farmer · Dec 17, 2020

The value as farm land does not set the value even though a lot of land in my area is still used to run mostly cattle. I'm farther out than the $7M piece but there is a 6 acre lot for sale across the road from my place for $370,000 just listed probably won't last on the market but a couple weeks.We have land use taxes for farm land so if its farmed the taxes are only about 20% of what they would be if it was for residential.

NY 986 · Dec 17, 2020

I'm not saying how much land is around here because price is out of whack to productivity by a country mile but I would love to buy GOOD farmland for that kind of
money 3,000 dollar/ acre. The Mennonites would be cruising around your area if they could buy at 3,000 dollars per acre even if it just had minimal top soil.

CaseChev · Dec 17, 2020

I guess I scratch my head whenever one of these land values threads comes up. Everyone laments and bad mouths "city people" who pay farmers seven million $$$$$$$ for 35 acres of land. Why does no one celebrate a farmer who has made a gazillion $$$$$$ from selling off a small portion of land. Isn't that a good thing ?? And before you get into the "feed the world thing" doesn't the price of land going up increase the value of land you already hold .......just like the value of a stock or bond going up ? I'm sure the price of land going up is a bad thing for the big time operator who wants to own the whole county......but again, how is land value increase a problem for a land owner ??

NY 986 · Dec 17, 2020

I know a fellow who had some very hot land in terms of development potential SE of Rochester, NY and they struggled to get 11,000 dollars per acre on a 17 acre parcel. The ground sat and sat for quite a number of years while 750,000 dollar homes were being built within a half mile of that lot.

Bruce from Can. · Dec 17, 2020

Decent farm land around me will already bring 10-12,000.00 per acre. And a simple house on a lot is a half million. My farm directly borders on a village of 900 people, and will probably one day become houses, but not likely during my life. I kid people that it is the site for the future Walmart. Our home farm is a one and a half hour drive to downtown Toronto. And people from Toronto are moving here, and driving back to the city to work. A plain house in Toronto sells for a million bucks. Yes some folks have money, and others have to move out to where they can afford to live.

Traditional Farmer · Dec 17, 2020

A million dollar house could be built on land that cost $100 an acre,wouldn't make the land worth more.

Traditional Farmer · Dec 17, 2020

I agree I might decide to sell my place if things keep going like they are now,could buy a better place in SW VA or WV for less than 25% what I'd get for this one.

NY 986 · Dec 17, 2020

Depends on the distance to a sizable population center and if a desire is there by the million dollar home owner to be isolated. I worked for an 84 Lumber outlet near Rochester, NY shortly after college during the 1980's. The home market for high end residences was just starting to take off. I got to know several developers that came in on a daily basis. One guy did build a high end home in a neighborhood that was nothing but corn and snap bean fields before he got started. He followed a clean slate approach in terms of starting a project in an area that did not have low income housing densely packed together. This fellow worked for a major Rochester, NY and bought land in that area over time with the express intent of building expensive homes on it. 100 dollars today, 10,000 dollars when the McMansions sprout like corn in an Iowa field. One other thing I learned from these builders is nearly all insisted on turning a profit on the land by itself. A home may sell for 350,000 dollars but if the land cost the builder 5,000 dollars then he was looking to make at least 10,000 dollars on that same tract.

Steve in VA · Dec 17, 2020

You are more than welcome in SW Va.

NY 986 · Dec 17, 2020

As Tom alluded to many farmers put themselves in a good longterm situation by making a move where their financial resources stretched in a pleasant manor. Many used the Section 1031 rule as part of the move. I'd love to be in a position where the developers were knocking and I could trade into more acres of better ground.

showcrop · Dec 17, 2020

(quoted from post at 14:30:37 12/17/20) A million dollar house could be built on land that cost $100 an acre,wouldn't make the land worth more.

TF, maybe the land would not be worth more, but probably before long it would be.

John in Mich · Dec 17, 2020

In 1986-7 (34 years ago) I was regularly visiting Toronto for GM Powertrain. I went to Scarborough and Oshawa weekly.
A union man at Scarborough told me that he had just bought a 2 story attached house, $300,000. I like to have fallen over. He had owned a 3 bedroom ranch. I was trying to figure out how he could afford that. He said he sold the ranch for $300,000. DANG! My current house is 4 bedroom, 2 bath with a full walkout basement, a 48x48 barn and 3 acres. I would be close to a statement my dad made in 1967 when I told him someone wanted his property for $30,000..."I wouldn't even pack a toothbrush". (Of course my wife says no)

Mike(NEOhio) · Dec 17, 2020

The farming started dying out back in the late 70s around here and a lot of subdivisions went up. FIL held out and we still have most of the land for hay. A few boom/bust cycles for the developers since then but it's been fairly stable lately. One place near me is up for sale now for 2.9 mil and nothing and there's nothing special in this township.

DoubleO7 · Dec 17, 2020

(quoted from post at 16:21:04 12/17/20) They could try jacking up the assessment, but they would have a hell of a fight on their hands around here.

Then again the taxes are based on the assessed value of the land not on what someone paid for it. Just because someone paid $7M for a 35 acre piece doesn't make it worth more than the $3000/acre it would bring around here.

The house is the primary determining factor in the value of a property. No million-dollar McMansion, no high-dollar assessment.

Florida has a agriculture zoning classification available, but you have to ask for it. Then property taxes are held very low, like 10% of what the same size and type of property next door might be paying without the ag classification.

The developer trick here is to buy large tracts of residential development land and then rent cattle from a real rancher.
The rancher not only gets to run his cattle on somebody else's land free and clear, but also gets paid to do so.
Which maintains the extremely low property taxes.
They can do this indefinately.

SVcummins · Dec 17, 2020

I’ll take my chances

Absent Minded Farmer · Dec 17, 2020

It's things like that, that get my blood pressure to boil. We're not gaining tillable acres by growing house weeds! The planet sure as heck isn't going to birth another acre, much less 10,000. We need a moratorium on developing farmland into subdivisions, shopping centers, etc. I'll leave it at that.

Mike

Traditional Farmer · Dec 17, 2020

You can relax there are millions of acres in the SE USA with Pines on them that could be used for crops if there was any money in it.People here have let a lot of good crop and pasture land grow up in trees and bushes because there is very little money in farming because of over production.

flying belgian · Dec 17, 2020

I agree with TF. I thought I read somewhere that worldwide we are only using something like 30% of the arable land for growing food.

Absent Minded Farmer · Dec 17, 2020

That is interesting. Never thought of it that way. Around here, farmland is at a premium. So, I do tend to get a bit excited when I see urban sprawl.

Mike

SHALER · Dec 17, 2020

Agreed TF. when I was looking for some farm ground I had some one say to me (I think it was a banker) "thats a good idea, they arent making any more of it". Which is an old saying, but is patently false. Im sure quite a lot of otherwise idle ground went in to production around 2010-2011-2012 when corn and beans were at their high water mark.

Eldon (WA) · Dec 17, 2020

(quoted from post at 10:40:16 12/17/20) In Washington, eligibility for ag taxation is determined by statute, and is immune from outside influences like $7 million condominiums next door. You can get ag taxation here as follows: 1-5 acres, gross ag income of $1,000 per acre. 6-20 acres, gross ag income of $1,000 for the parcel. 21 and up, no $ amount of ag income required, but parcel must be used for some kind of ag (giving free use to your neighbor to pasture his 2 steers in the summer is enough). If you cease ag use, you can take it out by paying the balance of the taxes you would have paid for the past 7 years.

I was told the balance plus 25% penalty.....maybe if differs by county.

Eldon (WA) · Dec 17, 2020

(quoted from post at 14:30:37 12/17/20) A million dollar house could be built on land that cost $100 an acre,wouldn't make the land worth more.

Tell that to the county assessor!

CaseChev · Dec 17, 2020

Still struggling to understand your logic.......if no new farmland is being made......and more is being sold by farmers for big $$$$$ to build houses.......doesn't that reduction in supply make your land worth more $$$ ? Just like reduction in supply of beans or corn makes your beans and corn worth more $$$$. What am I missing ??

Texasmark1 · Dec 18, 2020

Priceless!!! Grin. Hats off to you and your cows....must be some hardy critters.....Do you suppose that resistance to winters is built into the gene pool and pass on to the offspring? Hats off to you getting out there and keeping them fed.

I remember a movie when I was a kid, a C 19 Flying Boxcar, flying low and crew members kicking the bales out the rear side doors, was delivering hay to ranchers somewhere in central US. Blizzard conditions, couldn't get to cows by land. Quite an experience just watching it.

NY 986 · Dec 18, 2020

Let's qualify that statement. There would be money in crops if they could be grown at a profit. Lots of land around here that a tractor or a horse can get over but the quality is poor enough that it seldom grows a crop at a profit. That is why ground around here has grown into woodland in the last century from previously being cropped or pasture.

Traditional Farmer · Dec 18, 2020

Much of the land that is planted to Pines and was farmed at one time,but during the Depression land was dirt cheap and the pulp companies bought it up to plant pines.Good farms are right beside many of those stands of Pines.Actually the Amish from MD and PA have been moving into Southside VA just South of me where good land can be bought cheap compared to many places,they have some really nice farms going.

Farming in the Burbs

Well-known Member

Well-known Member

Member

Well-known Member

Well-known Member

Well-known Member

Member

Member

Well-known Member

Well-known Member

Well-known Member

Member

Well-known Member

Well-known Member

Well-known Member

Well-known Member

Well-known Member

Well-known Member

Well-known Member

Well-known Member

Well-known Member

Well-known Member

Well-known Member

Well-known Member

Well-known Member

Well-known Member

Well-known Member

Well-known Member

Member

Well-known Member

Well-known Member

Member

Well-known Member

Well-known Member

Well-known Member

Similar threads