Land Market Heating Up In Wicomico County? The Full Story.
A primary purpose of the Acreage Blog is to provide readers insight into local land markets. To this point, we are witnessing a significant market trend in land values across Wicomico County. At The Land Group we work every day to provide our clients with the best possible data pertaining to recent transactions. In addition to our insider knowledge of many transactions, we also search tax data, pull maps, measure acreage and tease out values. Recently, our group completed an analysis pertaining to land sales in Wicomico County dating back to January of 2014. The analysis included both farmland and timberland sales greater than 50 acres in size. While the timber market remained steadily centered around an average price of $1,500 per acre, the trend in tillable farmland values was quite different.
Looking closely at the data as well as the transactions we have closed, it is evident this trend has one major driver. The demand for poultry house development on the eastern shore is booming. At least 5 of the 17 transactions we analyzed in 2015 are poultry related. Due to the economics of poultry farms, buyers are able to cash flow more income from the land than traditional small grain farmers.As the above table shows, both the velocity and price of tillable land has appreciated drastically, and we aren’t even to the end of the year. In terms of percentages, the velocity of the market has increased roughly 183% and the market price has increased roughly 40%. These numbers are quite substantial. We do believe the farmland data for 2014 was negatively skewed due to several large auction transactions that did not bring full market values. In 2014, our cocktail party answer to the value for tillable agricultural land was $5,000 per acre. Even such, there still appears to be a significant increase in land values.
While this seems fairly straight forward, one fact the table above does not tell you is how incredibly difficult it is to find suitable land for poultry farms. Not only does each county on the Shore have its’ own setback requirements, each poultry integrator also places requirements on land for new chicken house development. As the Poultry companies strive to be good neighbors, the number of parcels that will work has diminished. In addition, the economics of a poultry farm put a cap on the acreage amount that will cash flow for a poultry operation. A typical poultry farmer seeks a 50 acre cleared field with road frontage that is well removed from residential development. This subset of our Wicomico county land market is fiercely competitive with deals closing over $7,000 per acre. However, outside of this sub-market, farmland values remain constant around $5,000 per acre. All in all, it is a great time to be a seller if you own a piece of land that has potential for poultry house development.