Options Unveiled for OSU-Cascades 4-Year Campus Design

              OSU-Cascades has unveiled three design options for the 56-acre site chosen for its expansion to a 4-year campus, while engineers continue to investigate soil and other issues at the former pumice mine on Bend’s west side.

            At community meetings Dec. 12 and 13, design consultants for the college presented two scenarios that would take advantage of the existing excavation and a third requiring extensive fill material.

            The university has said it plans to break ground in July of 2014 for construction of a “living-learning” center of about 146,000 square feet on a 10-acre parcel along the east side of the site near the Century Drive and Mt. Washington Drive. The Phase 1 facility would be open for the Fall 2015 academic year.

            The Phase 2 plan would involve design and buildout of the additional 46 acre property bordered on the west by Mt. Washington Drive across from Broken Top golf community. University officials say Phase 2 will include continued community outreach over a two-year period, already underway, before construction begins.         

            The three master plans presented at the recent community meetings were identified as Terrace, Rim and Canyon options.             

            With the Terrace Plan, the existing excavation on the site would be extensively filled, which design planners said would be more conducive to a commercial setting than an academic campus.           

           Of the other two approaches, planners said the Rim plan would have academic and administrative buildings set along the north rim of the excavation to provide optimal southern exposure. Most buildings would be along the bottom of the excavation in the Canyon option.

            In all options, campus residences would be on the east and west sides of the site. Long-term plans would be to have parking on the north side, possibly on land owned by Deschutes County on the south side of Simpson Avenue that is a former landfill.

 (refer to previous posts from archive list at right)

            

Bubble, Bubble?...Toil and Trouble...

With apologies to Shakespeare. (the actual phrase from Macbeth is “double, double..” etc.)

There’s  a lot of bubble talk these days, mostly in the direction of the stock market. Instead of a brew of eyes of newt, frog toes and other unsavory ingredients,  market  witchers (couldn’t resist) are running the numbers and letters for an alphabet soup of stock forecasts.

Some say the sky could be falling. But other analysts believe there’s more on the upside, even after the S&P 500 Index and Dow Jones Industrial Average reached all-time highs earlier in November.

It’s been a remarkable runup by the two major indexes and also many individual stocks since late 2008-early 2009 when equities led the housing recession in a freefall.

 Since March of 2009 the S&P 500 has increased by nearly 165% and the DJIA by 137%. Over the past year the indexes have risen nearly 28% and 23%, respectively.

Now that real estate--residential and investment-- is recovering around the country, there’s a logical question on the minds of many, i. e.,“Will jittery investors move more assets out of stocks and into real estate?”

A recent CNBC report supports the scenario of an exodus from stocks to real estate and other investments.

The report cites the Spectrum Group “Millionaire Investor Confidence Index” which recovered slightly in November after a precipitous decline in October.

According to CNBC’s report, millionaire households had the largest increase in assets for a single November since 2007, as the result of the continued climb of the stock market.

Millionaires planning to invest in stock mutual funds declined by 5%, CNBC reported, but those considering real estate or cash equivalents increased by 7%.

Get out the boards...layer the fleece!

         Powdr Corp., owner and operator of Mt. Bachelor, says it will make a decision soon on opening of the 9,000-foot ski mountain. Several storms crossing the Cascades along with colder weather have given a boost to the mountain snowpack this week. As of early Wednesday morning, Nov. 20, the mountain web site was reporting 27 inches of snow for the past 7 days, including 7" in the past 24 hours.

Nordic Lodge

Base of Pine Marten lift

                                      

Mid-Mountain

Snowfall measured at 7,300' near the top of the Sunrise Express lift

Since 3 p.m. Yesterday 13"

24 Hour Snowfall 7"

3 Day Snowfall 16"

7 Day Snowfall 27"

Snowfall Since Oct. 1 65"

Snow Depth 21"

West Village Base

Snowfall measured at 6,300' near the bottom of the Sunshine Accelerator lift

Since 3 p.m. Yesterday 3"

24 Hour Snowfall 6"

3 Day Snowfall 13"

7 Day Snowfall 21"

Snowfall Since Oct. 1 46"

Snow Depth 20"

Running Y Ranch resort on the market block

            The Running Y Ranch in Klamath Falls, one of three Oregon resorts acquired from window and doormaker Jeld-Wen in 2010, is now up for sale.

            CBRE Hotel group in Seattle is the broker for Northview Hotel Group, which also acquired Brasada Ranch in Powell Butte and Eagle Crest in Redmond concurrently with Running Y in late 2010 for an undisclosed price.

            Northview is backed by Oaktree Capital Management, headquartered in Los Angeles with offices in Europe, Asia, and the Middle East.

            Among a wide range of investments, Oaktree specializes in acquiring real estate debt intended to generate current income without controlling the underlying asset. Current information on the company web site notes a real estate portofolio valued at $244 million.

            Northview’s corporate profile says  that since 2004 the company has acquired more than $700 million in hospitality industry properties. In addition to the Oregon properties, the company now owns resorts in North and South Carolina and Florida, as well as a California hotel and others on the East Coast.

            Seattle brokerage CBRE’s offering brochure does not provide a price for the 3,600-acre Running Y, located  in an area along Klamath Lake.

            The assets in the offering include:

·        An 88 room lodge and conference center, which underwent a $3 million renovation in 2011, according to the offering.

·        51 sale-ready  lots and another 57 potential lots to make site ready  by a new owner

·        18-hole Arnold Palmer signature golf course

·        A utility company with 350 connections

·        The HOA management company with six separate associations

The offering brochure says the resort experienced “solid” and “accelerating” gross income that increased to $5.91 million in 2012, a 24% increase over the previous year, yielding net from operations of $260,635. Lodging occupancy was up more than 47% with room rates averaging nearly $96.

There was also “stable,” but not disclosed operating income  from the utility and HOA, which manages 1,149 custom homes and townhomes, the offering noted.

Northview is offering the resort “unencumbered” by debt or existing management. The hotel can also be acquired without brand affiliation, which is  now with IHG International’s Holiday Inn Resort group.

Metolian resort development rights transfer debated

            “Every legislative session I’ve been in, there’s been a ‘one-off’ with land use,” .... “Like Nike....we do special things sometimes, don’t we?”

            As quoted in the Nugget newspaper of Sisters, state Rep. John Huffman’s (R-The Dalles) honest comment focused on the legislative loopholes and political give-and-take in Oregon’s 1970s land use law.

            In this case Huffman was referring to objections raised in a Sisters public meeting Aug. 29  to legislation related to the “ transfer of development opportunity” (TDO) rights that emerged after earlier legislation ended plans to build the Metolian, a planned “eco-resort” in the Metolius River Basin near Camp Sherman.

            Shane Lundgren of Camp Sherman, the original Metolian developer, has been working to find an appropriate location to exercise his state-granted TDO to build another resort.

            The original TDO legislation was enacted after Lundgren’s Metolian proposal was denied when the legislature voted to establish the Metolius Basin location as an Area of Critical State Concern, effectively ending any future plans to build resorts in the basin.

            Also affected by the land use designation was a proposal by Ponderosa Land & Cattle Co. to build a resort--that could have included a golf course--in the Green Ridge area above the Metolius River. However, Ponderosa retained the right to build a limited number of homes on larger parcels in the area.

            Jefferson County had included the proposed Metolian location in mapping areas for potential resort development, as required by the state land use law.

But the special legislation overruled  the county by designating the Area of Critical State Concern.

            The legislation prohibiting the resort and subsequent TDO legislation have both been cited as examples of how the state land use law can be manipulated--by interests on both sides of a development issue.

            The TDO legislation, HB 3313, would allow Lungren to build on land not currently designated for potential resorts in economically depressed counties with chronic high employment.

            In the Aug. 29 Sisters meeting the focus of the discussion was the possibility that the TDOs could be transferred for expansion of the existing Aspen Lakes golf community east of Sisters on Hwy 126.

            The plan could allow about 480 homes, along with nightly lodging and additional recreational facilities,  to be built on 640 acres of Cyrus family land along Camp Polk Road. There are also reportedly five other possible sites considered  by the Lundgren group.

            Previously unsuccessful proposed legislation, unrelated to the current TDO issue, would have allowed Aspen Lakes to expand under designation as a  “Cyrus Heritage Farm.”

            In additional meetings in the Sisters area the discussion has moved from specific legislation to allow TDOs to be exercised at Aspen Lakes to expanding the counties in which they could be used, including Deschutes and Jefferson, the latter in which the original Metolian Resort was proposed.

            Huffman has been sponsoring the public “work group” meetings with participation of state agencies including the Oregon Department of Land Conservation and Develop, Oregon Water Resources Department and Oregon Department of Fish and Wildlife.

            As quoted recently in the Bend Bulletin, Huffman said he is not anticipating new legislation that would specifically designate the Cyrus property or other land for resort development. Instead he has now said any bill be intended to include Deschutes and Jefferson among possible county locations.

            Additional meetings on the TDO issue are expected in November.

Foreclosures on decline but still a factor

            Foreclosures and short sales that  ripped through the regional real estate market with the deepening recession have declined dramatically as a percentage of total home sales.

`           In 2010, the peak for distressed sales, foreclosures and short sales accounted for 56.73% of the 1,553 single family homes sold in the greater Bend area, which is by far the largest sub-market  in Central Oregon.

            As the housing crash began in 2008, only 7.35% of Bend area sales were in the distressed category. But in 2009 the number accelerated to 54.94% of total sales and continued above 50% until beginning to decline in 2012 when 726, or 18.17%, out of 1,902 single family homes sold were in the distressed category.

            In 2012 through late October the total of single family homes sold has already reached 2,122, with only 247, or 11.59% of those either short sales or foreclosures.

            Although seen as a positive trend, the decline in distressed sales could also be partially the result of a new state law that caused some lenders to pull back from issuing notices of default for a time.

The law was intended to encourage lenders to sit down, and ideally negotiate, with delinquent homeowners. But the voluntary nature of the statute resulted in many lenders turning from the nonjudicial path to the courts through the judicial foreclosure process, both of which are allowed in Oregon.

With a recent “fix” by the legislature, lenders are now required to negotiate with homeowners in either foreclosure method.

When most lenders were opting for nonjudicial foreclosures the process would typically take about six months from the filing of a notice of default with the intent to proceed to trustee’s sale after that period.

            In 2007, before the housing storm hit, there were only 591 notices of default recorded in all of Deschutes County. That tripled to 1,930 in 2008 and rose to 3,507 in 2009 and a high of 3,762 in 2010 before tapering off to 2,363 in 2011.

            For 2012 default notices dropped to only 797 before rising again this year  when 858 were filed through late October.

            Even with single family sales in the Bend sub-market through 10 months of 2013 more than double all of 2008 there’s still the possibility that more distressed sales are in the “shadows.”

            However, there is considerable new housing construction at the lower to lower middle market and financing is available to qualified buyers. Inventory as measured by annualized previous month-to-month sales is also low at less than 4 months.

As such, new distressed sales coming onto the market would possibly be absorbed by continued steady, barring continued dysfunction in Congress or the Federal Reserve making an abrupt about face by driving up interest rates.

           

             

Indian Summer ends with windy, snowy flourish

            So much for that earlier post of only a few days ago bragging about Bend’s string of extraordinarily  balmy Fall days.

            From the 60s on Friday, Oct. 25, Saturday morning emerged cool with blue skies before a fast moving cold front brought rain in town and snow in the high country.

            Then by Monday morning came a dusting of snow with temperatures hovering in the 30s at midday.

            The result is that inflection point among outdoor enthusiasts, with snow sports types wishing for more of the white stuff and others hoping to squeeze in another warm day fly fishing or mountain biking. 

Bend in Brief - Fall 2013

Surviving then Thriving

            At the depths of the real estate collapse Bend-based Cascade Bancorp., parent of regional Bank of the Cascades, was among many banks on federal regulators’ watch list and required an infusion of investor capital.

            But the bank now appears to have turned the corner, recently reporting positive quarterly earnings and in mid-October announcing the planned purchase of Idaho based Home Federal Bancorp.

            Cascade Bancorp will reported pay $265 million for Home Federal, Idaho’s largest bank, based in Nampa east of Boise. The bank has seven branches in Central Oregon, including four in Bend, and eight others elsewhere in Oregon as well as 11 in Idaho.

            Altogether the acquisition would give Bank of the Cascades 57 branches in Oregon and Idaho.

Tourism numbers continue a steady climb

            As indicated by lodging tax returns, Bend tourism and conference business continues on a upward path after hitting a low point in Fiscal Year 2008-09.

            For the fiscal year ending June 30 “transient room tax collections” of $3,888,069  were 10.34% above the comparable period of July through June 2012-13, and 32.5% higher thatn 2008-09.

            Looking at the lodging tax statistics for each of the past five fiscal years,

receipts increased every month year to year except for October and December of FY 2011-12 and July of FY 2012-13.

            For the past fiscal year in Bend, July had the largest tax receipts of $543,438 and November the lowest at $178,469. The largest month to month increase was in May, which rose 17.69% over the same month of FY 2011-12.

Low flow in Mirror Pond brings issues to surface

            Open most tourism publications or web sites featuring Bend and there’s a good chance you’ll discover a photo of Mirror Pond and Drake Park--often with canoeists or kayakers and the Cascades in the distance. (take a look at the opening photo of this blog).

            In recent years the there’s been a longstanding discussion (controversy? debate?) of how to address continuing silt build-up that could eventually turn this slackwater “pond” on the Deschutes River into a wetland.

            Special committees have been formed. editorials written, polls taken.  But by Fall of 2013 there’s been no firm direction as to whether to dredge again to keep the pond, create a more free flowing stream or some combination that would create a shoreline wetland.

            Another factor has been the small Pacific Power hydroelectric dam just north of the Newport Avenue bridge. The big utility concedes the power output is minimal but has not indicated if it will remove the dam, although the company is meeting with local officials.

 Complicating matters this Fall there has been a major leak that resulted in offering Bend a muddy view of what Mirror Pond would look like without the dam.  The only agreement by everyone seems to be less talk and more action.

           

COCC to build dorm on campus site

            Much of the buzz about Oregon State University’s transition to a full 4-year OSU-Cascades branch on a planned 56 acre site has overshadowed it’s current facility partner Central Oregon Community College.

            Now COCC has announced plans for a new 330-room,  dorm that would be built in a three-wind terraced configuration on the college’s current southwest corner along Mt. Washington Drive.
            The college has chosen a construction manager-general contractor approach to better define final costs, estimated to be in the range of $16-$16.4 million. The dorm is expected to be ready for occupancy of the 10 communities of 33 students each by the summer of 2015.

PREVIOUS POST

Break out the cigars...it's a campus!

 

Fall 2013 - Bend weather lives up to its reputation

            Bend often gathers kudos for a reported annual 300 days of sunshine, little snow in town but much only 20 miles away at Mt. Bachelor and Spring days when you can ski in the morning and get in a round of golf before dark.

            The Fall of 2013 has brought the usual spectacular colors from turning aspen, alder, maple and other native and ornamental trees. But the weather has also been remarkable with crisp mornings in the 30s that call for a warm fleece and afternoons in the 60s, even 70s, that beg for shorts and T-shirts.

            The graphic below from a recent National Weather Service forecast says it all. Get out and enjoy the weather.

Break out the cigars...it's a campus!

            If all goes as now planned approximately 56 acres bordered by Mt. Washington Drive and Chandler Avenue on Bend’s west side will be the site of a new campus for the emerging 4-Year OSU-Cascades college.

            The preferred site, just west of the gated Broken Top golf community, was

announced by OSU officials Sept. 13. But many who had followed the process had considered it an obvious choice as one of the largest parcels within the city limits.

            Early reports some weeks ago indicated the adjacent former landfill owned by Deschutes County might be under consideration.  But two parcels, one approximately 46 acres and the other 10 acres, just south of the county site are now leading the way on a fast track to have new facilities ready for the 2015-2016 academic year.

            Plans call for 146,000 square feet of facilities by then, which would include both classroom and onsite living quarters for students.

The proposed site of the new OSU-Cascades campus

            Depending on results of OSU’s due diligence period, which runs six months with a possible 60-day extension, the university has agreed to pay a total of nearly $13 million for the two parcels.

            The legislature appropriated $16 million in bond funding in the last session that ended in July. This would be added to $4 million from the university budget and another $4 million raised within Central Oregon.

            OSU and its consulting engineering and environmental specialists have begun their Level 1 assessment of the smaller parcel. Recent reports in local media say there was some evidence of “non-native” material that could have migrated from the adjacent Deschutes County property, once used for demolition, construction, industrial and other problem waste.

            However, OSU officials were quoted as saying that a lot line adjustment could be considered to remedy portions of the site that might have material that moved from the county property. In the long-term, an OSU official said, the county site could be an expansion possibility for the campus.

            Apparently never under serious consideration as a potential campus site was the 1,500 acre Juniper Ridge project owned by the City of Bend, which recieved the land as a gift from Deschutes County.

            The city had intitially said it would like to see research companies and a major education facility on the property. But the region’s severe real estate downturn, transportation access and a dispute with consulting developers over the project’s master plan have plagued the project.

Housing: nearing the $1billion mark again in 2013

            For the second year in a row the regional residential real estate market is on track to break  the $1 billion sales volume threshold.

            Sales of single family homes totaled $956,753,029 through the third quarter, according to preliminary figures from the Multiple Listing Service of Central Oregon, a pace that will surpass 2012 sales of $1,005,488,048.

            But the past two years would remain below the volume of the bubble years, when there were sales of $1,939,113,490 in 2005; $1,835,737,987 in 2006 and $1,246,025,261 in 2007.

            Then came the implosion of 2008, when volume plummeted to $791,699,547 and remained in a more narrow $25 million range for 2009 through 2011 three years until cracking $1 billion again in 2012.

            By any measure the Central Oregon housing market, led by the greater Bend area with more than two-thirds of 2013 volume thus far, is continuing a recovery from one of the most precipitous declines in the nation during the past recession.

            But homeowners, developers, builders, brokers, craftsmen, retailers--among others-- are holding their breath as the prolonged debacle in Congress and slowly escalating interest rates threaten to impede a fragile economic recovery.

            Looking at the past years and 9 months through September of 2013 (chart below):

·        The number of homes sold has increased in all regional sub-markets except Crook County, which declined 4%.

·        Median prices increased across the board, in a range of 4% in Sunriver to 38% in LaPine.

·        Bend lead in the number of sales with 44% more closings--1,933-- than all other sub-markets combined.

·        Inventory, as defined by an average of the previous 12 months sales, was lowest in Bend, at 3.10 months supply. Sunriver had the highest inventory at 9.60 months.

·        Cumulative Days on Market (CDOM) decreased in all submarkets, with the largest drop in Bend of 25%, from 105 to 79.

           Follow the blog for updates on other market categories as we enter the final quarter of the year. For previous market updates, go to Market trends .

Bend housing market continues showing strength at mid-summer

             Going into the second half of 2013 the Bend single family housing sector--a market bellwether for all of Central Oregon--is running slightly more than 7%, at 1,508 homes old,  ahead of the comparable 1,418 closings from January through mid-August of  2012.
            More important, perhaps, median prices are nearly 30% higher for the year, rising from $224,700 to $279,000, with total sales volume up nearly 33% from $376,964,606 to $500,590,023.

            The statistics are gleaned from the Multiple Listing Service of Central Oregon database.

            At the same time the median cumulative days on market (CDOM) have declined 19% to only 84 days.

            Another sign of an improving market is the drop in percentage of short sales or foreclosures. In the first 7.5 months of 2013 there were 208 sales in the distressed column, or 13.7% of all single family sales, down from 581, or nearly 41% in 2012.

            Inventory as calculated by averaging the previous 12 month sales was about 4.0 months at mid-August, an increase from the less than 3 months inventory earlier in the year. As a frame of reference, at one point in the depths of the housing recession there was a 13-month inventory of single family homes in Bend.

            Also showing market improvement is the pace of new homes sold in 2013.  Through mid-August about 19%, or 288, of homes sold were completed in either 2012 or 2013, compared with 11.4%, or 162 of sales in the comparable 2012 period of homes built that year or in 2011.

            There is also surprising strength in the $500,000 to $1,000,000 price bracket. For comparable 7.5 month periods of 2012 to 2013, sales of homes in that category nearly doubled, up 96% from 99 to 194 closings. And the cumulative days on market  dipped from 204 days to only 112.

 

4-Year OSU-Cascades passes legislative funding milestone

            The “what” and “how” are settled. Now the “where” for a location of the new 4-year OSU-Cascades campus has moved to the forefront.

            The Oregon legislature wrapped up its session in July with inclusion of $16 million in bond funding for the new university. That combined with an estimated $4 million in community pledged support and about $4 million from the college budget meant the dream had moved to reality.

            Work is now well underway in how to phase in facilities for the new campus, which by 2025 is expected to have capacity for 5,000 students.

            Initially it appears likely administrative and classroom space will be in existing commercial space within Bend, with an estimated short term need of 70,000 to 90,000 square feet.

            In the long term local broker Compass Commercial and a Portland consulting firm, SRG Partnership, have identified a large footprint on Bend’s west side that could accommodate the expansion beyond the current site now shared with Central Oregon Community College on the south side of Awbrey Butte. OSU-Cascades now occupies approximately 65,000 square feet at that location and another on Colorado Avenue.

            One potential site that has emerged in public discussion is the 85-acre former Deschutes County landfill property along Mt. Washington Drive and Simpson Avenue--just east of the Broken Top Community.

            Apparently not on the short list, as yet, is the City of Bend’s 1,500-acre Juniper Ridge project on the northern edge of Bend along Cooley Road. Several years ago city officials were touting the site as ideal for a major university and research center. 

 PREVIOUS POST 

4-Year OSU Cascades campus moves into site location phase

Briefly updating the region

Back in the top 20

            After ascending the summit of national home appreciation in the “bubble years,” then plummeting to the bottom in only two years, the greater Bend area is back in the top 20.

            Just released numbers from the Federal Housing Financing Agency  for the first quarter of 2013 rank Bend as number 20 among single family home appreciation for 2012, with a rise of 7.69%. For the first quarter of 2013 prices rose 3.71%.            But prices are down by 34.30% for the past five years.

An earlier post in 2011

From the top 20 to the bottom 20...

Region’s leading bank in recovery

            With a portfolio weighted down by troubled development loans Bend-based Bank of the Cascades went on a federal watch list for at risk lenders. But with it’s recent report of $1.7 million in net income for first quarter 2013, along with gains for the previous four quarters, the bank appears poised for growth along with the housing recovery. Deposits for the quarter rose by 11%.

            Following the reports BOTC officials noted the bank has shrunk from an asset base of $2.5 billion in 2010 to $1.5 billion. Now the lender will concentrate on growing through acquisitions in selective markets and cost cutting by closing some branches.

Population growth ramps up

            Maybe Bend city officials can postpone correcting the population signs entering town if the current influx of new residents continues.

            New federal census figures estimate the city’s population at  79,109 as of July 1, 2012, a 3.2% increase from the same date in 2010. That ranks Bend as the fourth fastest growing city of more than 50,000 in Oregon, behind Hillsboro, Portland and Beaverton.

            Bend grew by about 20,000 residents between 2000 and 2007, but added fewer than 2,000 residents from 2008 through 2010. Another 2,500 were added in the 2010 through 2012 period.

            For some years the small green population signs entering town have pegged the city’s population at more than 80,000, a number that Oregon State University’s population forecast center has questioned.

Construction to start on Old Mill hotel

            Site preparation has begun for a planned 114-room Hampton Inn & Suites on a 4-acre property at Columbia Street and SW Shevlin Hixon Drive in the Old Mill District adjacent to the Les Schwab Ampitheater.

            Boise-based AmeriTel Inns will develop the property and is the joint permit applicant  along with William Smith Properties, the Old Mill District Developer.

AmeiTel also operates the Hilton Garden property on the ridge above the Old Mill District retail area on the opposite side of the Deschutes River. The company  had earlier put on hold plans for the site as the economy headed downward  following contruction of the Hilton Garden, originally known as AmeriTel Inn before rebranding in 2012  under the current name.

Region avoids explosive farm and ranch prices

            Ranch owners come in a number of categories: those who would just like the open space setting, others who want a mostly passive investment perhaps with recreation potential and the truly hands-on rancher in it for the long haul.
            For those with their hands off day-to-day operation the phrase “All hat and no cows,” might fit.

Some 10 years ago I recieved a call from a woman in Florida saying she and her husband were considering a move to Central Oregon. She added with apparent skepticism, “my husband thinks he’d like to grow some hay.”

            Neither of the couple had any family background or experience in ranching. They wanted a place with elbow room and a good site to build a home, which they realized by buying in a gated estate property with irrigated hay fields and a vineyard run through the homeowners association. In effect, it’s a taste of  ranch life without the work.

            The neighboring property  to their gated environment is a working hay and livestock ranch owned by the founder and chairman of a well-known  international athletic equipment and apparel company. 

            Several years ago I listed a 550-acre ranch far from the nearest grocery or retail stores. A buyer put much of his retirement plan into the acquisition, which included irrigated hay fields, livestock and a nice view home. A few years later he sold out after raising cattle for Kobe beef and returned  to a more urban setting.

Recently I had another call from a hedge fund manager looking for investment ranch land--no value in a home, horse facilities or livestock, just irrigated land in crop production.  He has never been a rancher but wants the potential benefits of productive land with a tax-friendly conservation easement potential.

A farm and ranch price boom in some areas of country

            Some of the current interest in ranch properties stems from a reported national rise in agricultural crop land prices. But the runup in farm and ranch land prices is giving rise to warnings from some quarters that prices may not be sustainable, and even concern of a possible boom to bust scenario.

            And, in what may be fortunate considering Central Oregon's lengthy real estate troubles, with a recovery in sight, the region's farms and ranches don't appear to have experienced an unreasonable spike in values.

            In late 2012 the Los Angeles Times reported Prudential Financial Inc., subsidiary of the insurance company, had acquired crop land with avocados, lemons, mandarin oranges and almonds in California. 

            In California the average cost of  farmland rose to $7,200 an acre in 2012 with properties in almond-growing areas ranging into the $15,000 to $19,000 according to the Times report.

            The demand for farmland has spawned a number of independent investment and hedge funds including Agriworld Fund Inc. and Famland LP in addition to funds such as Prudential’s.

            A recent report in the American industry publication noted farm land in the midwest “corn belt”  and the high plains appreciated from 15% to 26% in 2012 according to Federal Reserve studies. Some of the demand is being driven internally by existing farm & ranch owners who are less comfortable with stocks when allocating investment capital and also weary of low returns on cash equivalents and bonds.

            An April report by the Kansas City Federal Reserve Bank raised concerns that some farmers are using inflated land sale values as collateral to take on debt that may drag them down in a demand slump. Commodity prices have reached all-time highs and are due for significant  drops, according to various reports.

No frenzy in Central Oregon ag land market

            Also part of the downside equation is expansion of competing world-wide agricultural production and drought conditions in much of the country’s most productive regions.

            Although sales of farm and ranch property are picking up in Central Oregon there is an absence of frenzy such as reported in other areas of the country--and likely the less chance of a major bust.

            The region does not have the highly-productive food crop land found in areas of the midwest. Most land is in hay production with other crops such as mint, garlic, wheat and chickpeas to name a few. Most of the larger ranches for cattle grazing lie farther east toward Burns and beyond to the Idaho border.

Most of the properties included a residence, farm buildings and irrigation or other equipment, making it difficult to separate the price for productive acreage from the total assets sold.

            Throughout Central Oregon in the period from January 1, 2012 through May 19 of 2013 there were a total of 30 sales of farm and ranch properties listed on the regional multiple listing service at a median price of about $3,849 per acre. The median for land with no value assigned to a home was $3,499 and the average was $3,780. Total sales volume for the period was $27,185,850.