Land in demand: County’s farmland sells for thousands more per acre than rest of Pa., U.S. | Local News
A dirt path, covered in snow from a mid-March storm, cut through Tyler Neff’s 20 acres in Conoy Township, leading the way from his farmhouse, past a barn and, eventually, to the fenced-in areas where his cattle and hogs grazed.
“This is what we were looking for, really,” Neff said, grateful for the property that has become a base of operations for Mirror Image Farms, which he owns with his wife, Joella.
The pair, in their 30s, have owned the land for only a couple of years, and their farming operation has been around for less than a decade. Still, they have found success within Lancaster County’s crowded, often-costly and often-traditional farming community — an example that young farmers can find success in a place where competition for land is high and property values far exceed statewide and national averages.
But it’s success that the Neffs, who both come from agricultural backgrounds, said they doubt would have come as easily without some prior insight, as well as planning, existing relationships and outside revenue sources that ultimately culminated in farm ownership.
High land costs can be seen as a testament to desirability — reflective of productive local soils, flat fields and the proximity of farm-supporting businesses and markets. But it can limit options, favoring established farmers looking to expand or those with sufficient wealth to afford ever-increasing prices.
In Lancaster County, desirable farmland regularly sells for about $30,000 an acre, tens of thousands of dollars more than the statewide and national averages, local experts like Ann DeLaurentis have estimated.
DeLaurentis, a state-certified appraiser at Lancaster-based Concord House Real Estate, cited recent sales fetching as much as $60,000 an acre. Some properties sell for even more; a local lender cited properties going for more than $70,000 an acre. As a comparison, 2021 statewide and national per-acre averages rested at $7,600 and $4,420, respectively, according to the U.S. Department of Agriculture.
“It’s very difficult for someone who has no family connection to the land to get started,” said Leon Ressler, a Penn State Extension agronomy educator. “Our farms are passed along from generation to generation. That is especially true for the Amish community.”
Dale R. Hershey, senior vice president of agricultural lending at Univest Bank and Trust Co., said farmland in the county “has become extremely expensive the last couple years.”
Hershey’s 2021 records show 19 sold farmland properties with an average sale price of $29,320 per acre, he said, not specifying the properties’ sizes or locations. Not all of those properties were necessarily financed through Univest, he said. And to reach that average, Hershey said he chose to leave out three other pieces of farmland, which he called “anomalies” — properties that each sold for more than $70,000 per acre.
Rising value
By 2021, the statewide average price per acre had risen by about 17.5% since 2017, and the national average had risen by about 9.7%, according to USDA figures.
It’s probably safe to assume that the county’s farmland values have risen at a similar rate, Ressler said. DeLaurentis, who specializes in farm and woodland properties, agreed.
“There has been a definite increase,” DeLaurentis said.
DeLaurentis looked to the recent past for perspective, specifically land values recorded over a period beginning in mid-2020 and extending into 2022. She split her observations into two categories: properties measuring at least 70 acres and others between 30 and 65 acres.
The larger properties, she said, have sold at a range of about $18,000 to $47,000 per acre.
“That’s a pretty wide range, and it doesn’t mean that every tract of farmland out there falls within the high end of that range,” DeLaurentis said. “And keep in mind that includes farms with buildings, including costly poultry houses and modern dairy facilities and sometimes two houses and tracts of farmland without any buildings.”
That range, she said, is slightly higher than in 2018-19, when similarly sized properties were selling for about $18,000 to $30,000 per acre.
The same is true for the smaller farms, which recently have sold within a range of $22,000 to $62,000 per acre, as opposed to the $19,000 to $50,000 range observed in 2018-19, DeLaurentis said.
DeLaurentis said it would be irresponsible to draw definitive conclusions about how much farmland prices have changed. Her observations do not account for all countywide sales.
“You could try to infer an approximate percentage of increase from those ranges, say 10% to 20%, but an average price increase statement is not accurate without a full farm sales analysis over those sets of years,” she said. “And the small number of sales, with each farm being unique, makes any average sale price trend statement even less accurate.”
Value might also vary depending on exact location within the county, from one municipality to the next, experts said.
Annual data lacking
Determining a full-scale, countywide analysis of farmland values is difficult, with no current per-acre estimates available, according to officials with both the state and U.S. departments of agriculture.
County real estate sales records show a wide range of farm prices and include many properties with a varied mix of buildings, making a land-only price analysis difficult.
Still, the experts’ anecdotes likely provide some insight into the local farmland market, showing a possible increase in value since 2017 — the most recent year for which the USDA has county-level land value estimates, according to a spokesperson.
In 2017, local farmland was valued at an average of $18,285 per acre, according to the USDA’s nationwide Census of Agriculture, which is taken every five years (one is expected to take place this year).
At that time, Lancaster County’s per-acre land values already were well above statewide and national averages, which then were $6,470 and $4,030, according to the USDA’s National Agricultural Statistics Service. Lancaster County has outpaced those averages in every USDA Census of Agriculture since 2002.
The value stems, at least in part, from the county’s status as a leading agricultural community in the nation, experts said. It’s often billed as the most productive non-irrigated farming county in the United States, and farmland makes up more than 60% of the county’s entire landscape, according to the Lancaster County Agricultural Council.
Another factor driving prices higher is the relative infrequency of county farmland coming up for sale, and when it does, buyers also are often plentiful.
DeLaurentis, the appraiser, put it succinctly: “What can be said for certain is that demand is high and supply is low.”
Development restrictions
Demand for the land isn’t the sole result of its productivity, according to Patrick Fleming, an assistant professor of economics and public policy at Franklin & Marshall College.
Lancaster County farmers have the benefit of working in close proximity to agriculture-supporting businesses and markets — equipment, feed, fertilizers and services — that have developed around the robust farming community, experts said, revealing another factor that could drive costs.
The county’s multiple suburban and urban areas also set it apart from other heavily agricultural communities, like those in Iowa, Fleming said as an example.
“Population density is a lot higher here than in Iowa, so you just have more people competing for a fixed plot of land,” he said. “East Coast farmland just has more people nearby that are interested in purchasing it.”
Not all buyers are interested in farming, Fleming said, pointing out the county’s closeness to large metropolitan areas, including Philadelphia, Baltimore and, to a lesser extent, New York City and Washington, D.C.
Buyers include developers who might be eyeing the spaces for commercial or residential construction, some looking to build a home in a more idyllic, rural setting.
“There has long been pressure to develop farmland,” Fleming said, adding that some farmers nearing retirement or otherwise leaving the industry might consider selling to a developer because it’s often a lucrative option, bringing in more money than trying to rent out the land or simply selling to another farmer.
“To hold onto farmland and not open it to development, there almost has to be zoning regulations or an owner who has other criteria than profit,” he said.
Many Lancaster County communities have implemented agricultural zoning restrictions, an effort to ensure that certain farm-heavy areas cannot easily be developed for nonagricultural uses. Countywide, several hundred thousand acres are zoned for agricultural use, according to a decade-old report published by the county’s Agricultural Review Board.
Also, more than 100,000 acres in the county have been permanently protected through preservation organizations, such as the Lancaster Farmland Trust, which purchase development rights from willing property owners, placing deed restrictions to guard against the loss of farmland.
Even protected land — with all of its restrictions — has recently sold quickly and for high prices, said Jeff Swinehart, the trust’s president and CEO.
“It essentially doesn’t impact the value of the sale price of that farm in any way,” Swinehart said, adding anecdotally that a protected farm in the Ephrata area sold for $39,000 per acre earlier this year. “I think it just speaks to the high demand for agricultural land in the county.”
Fleming said land values also have been driven up by the higher prices farmers are getting for commodity crops like corn, soybeans and wheat. And until recently, he noted, interest rates have been low, making it easier for buyers to borrow larger sums.
“If we would have talked before the Ukraine-Russia conflict, I would have said that we were not going to have as much of an increase going forward, that prices for grains and commodity crops were not going to be as strong,” Fleming said.
Now, that’s not the case. And that means purchasers of farmland in Lancaster County need to be willing and ready to spend more, said Ressler, the agronomist.
Staying small?
There are more than 5,000 farms in Lancaster County, averaging about 78 acres in size, according to the Lancaster County Agriculture Council. That’s smaller than the statewide average at 137 acres, officials said.
Traditional small farmers, including those among the Amish and Plain communities, have maintained a longstanding landscape of agricultural operations in the county, eschewing modern tractors and other mechanized farming techniques.
Like farmers using standard techniques, Plain farmers also have established a network of economic support. In many cases, they are looking to grow their footprint, often bidding on available land, Fleming said.
“Some Amish are buying 10-acre plots, smaller plots of farmland, even if they are not farmers,” Fleming said. “I would call them investment purchases.”
It’s not rare for them to leverage outside income from sources like trades, construction and homebuilding to make additional land purchases, Ressler said.
For those Plain buyers, purchasing local farmland is often about preserving a way of life, ensuring that they can raise a family in a community that reflects their personal beliefs, including about agriculture, experts said.
“The ability to do meaningful work with family is a priority … even if it costs more to do it,” Fleming said. “Amish and Plain sect are willing to pay the cost to have places to live for their children and families.”
Young farmers
Despite the challenge of buying property, Pennsylvania leads the nation in its percentage of young farmers under age 35, and Lancaster County is one of just two counties in the country that have more than 1,000 young farmers, according to a state Department of Agriculture spokeswoman.
“The second county has fewer than half the number of young producers as Lancaster,” she said.
Programs exist to help, including the state’s Next Generation Farmer Loan Program, which locally is administered by the Economic Development Company of Lancaster County.
The program allows banks to offer federal tax-exempt loans, up to a certain dollar amount, to first-time farmers to help them with certain expenses, mostly land purchases. The idea is that the tax exemption will allow banks to pass on lower interest rates to borrowers.
Jessica Hamilton, the company’s director of economic development financing, said the company helps to move about 10 to 12 new farm properties in Lancaster County through the program each year.
That’s a lot when compared to other parts of the state, company President Lisa Riggs said.
“This is a program that Lancaster County sort of dominates,” she said. “The program that we run here … is actually like a national leader.”
When it comes to who’s participating, Hamilton said there is about an 80-20 split, with the majority of young borrowers requesting loans to pay for farms they are inheriting from parents or another older generation, versus a minority of those who are starting without any pre-existing ties to the industry.
