The Problem Of Rural Land Prices

Photograph by Stephen Kent Johnson

I am a promoter of rural America. Advocating for young people getting started to move to the country, and for those who are from here to stay. Yet I am often told I should stop. As there will not be any rural land left if city people do not stop moving here. People want to move to a little town like mine then turn off the vacancy sign and lock the door behind themselves. To protect its sense of place. But existing small towns are exactly where people who move to the country that do not intend to farm should go. To keep agricultural land in the hands of those who will use it and reduce pressure to develop it. High rural land prices are contributing to the decline of rural America by excluding small farmers, burdening local economies, and driving loss of rural population.

Agriculture is the foundation of rural America. Since 1980 we have lost 52% of cattle ranchers, 89% of dairy farmers, and 91% if hog farmers. On top of that the average age of a farmer is now 60 years old. Half of them will retire over the next 10 years, and $24 trillion in land will change hands over the next 20. After adjusting for inflation the average cost of an acre of farmland has tripled in my lifetime. This makes it damned difficult for someone who does not come from a farming background to get their start. This is one area where folks moving to the country are part of the problem. Buying up land only to let it lie fallow. As my brother in law recently said "they want the view but not the work, the porch but not the pasture." A place in the country has long been a status symbol. But past owners had the good sense to rent out the acres. Now they do not want the dust and noise and hassle. Still worse are the subdivisions and the exurbs. By which the city encroaches on the country. Consuming family farms and ending legacies into homogenous non-places in urban sprawl.

This burdens local economies by raising costs for long time residents. Disrupting the business ecosystem of the region. For generations rural towns thrived by supporting farming through small-scale trade. But when farm jobs go, other jobs go with them. No farming means no farm stores, no co-ops, no tire stores, or work for farm hands. Rural counties with heavy farm losses see a 10-15% drop in media household income in the decade to follow. Without local producers the price consumers pay for food rises due to transportation costs. The local tax bases shrinks from decline in economic activity. Even as changing land use increases the demand for roads, schools, and public services taxes pay for. This usually means rising property tax rates on top of rising land prices. Falling income and rising costs combine to cause a decline in the standard of living. This forces many rural residents to move on for the chance at a better life.

High rural land prices drive population decline two ways. By making housing unaffordable for longtime residents, and deterring new ones from moving to rural areas. Ones of the reasons I tell people to move to the country is that it is more affordable than big cities. The average price of a home for sale where I live is $578,000 though. 40% higher than the national average. In my work on the local planning board people stress over and over that they want us to preserve the rural character of the town. But we have to admit that even reasonable restrictions we impose to do that are part of the housing cost issue. Still I find good deals on rural places all the time only to share them and get "cash only" replies. The fact that a young person cannot get a mortgage on an old house is a problem. Changes to banking and insurance after the financial crisis means most of these places do not qualify for financing. Which makes no sense since it was the borrowers who were subprime. Not the properties. The only people who can get the deals are investors who want to come in and flip it. Or retired people who bought it for cash, as their second home, to fix up as a hobby. Lenders have shut young families out.

There are no easy answers to any of this. On the local level we can make it as easy as possible to build a single family home. Create special development overlay districts away from the town center to attract builders. Or offer tax incentives to new builds. Even as we try to restrict things like apartment complexes that no one wants. At the federal level we can ease restrictions on lending to allow more properties to qualify for financing without compromising on borrowers and restarting the subprime crisis. Not every problem has a political solution though. Market forces are powerful things, and some reforms have to start with the consumer. Helping people understand that high rural land prices are driving the decline of rural America is the first step to that. Even as understanding it myself makes me feel so blessed to live where I do.