The Current New Mexico Ranch Market – a 10,000’ View

There was a lot of buzz about the real estate market and the U.S. economy in 2022. Despite a market that showed signs of possible change, 2022 proved to be another strong year in New Mexico ranch sales.

As we look forward in 2023, the ranch market appears to be stabilizing, or normalizing. While the media reports largely on residential market conditions, ranch markets are viewed, and tend to act, completely separate. Ranches are extremely unique assets that cannot be recreated. In addition, the large majority of ranch transactions are purchased with cash. How did these factors affect 2022, and what do we expect to see in 2023? We’ve combined our data with that of several New Mexico land appraisers to take a closer look at the ranch marketing what we might expect here in 2023.

What Drove the 2022 Market

2022 saw several motivating factors for buyers. A large percentage of buyers were coming to the market as they sold real estate holdings for significant profits thanks to a hot national market, creating a surge of 1031 Exchange transactions. Conversely, Sellers were motivated by elevated Buyer activity, capitalizing on land values driven up during the Covid boom. Sellers in 2022 were able to demand higher listing prices based on market velocity and a shortage of quality inventory. In New Mexico for 2022, we saw an average price increase of 10.125%± over 2021, according to appraiser data and Industry statistics.

What We Expect for 2023

High interest rates should theoretically slow sales and lower values, but so far it seems buyers are still acting aggressively

Despite increasing interest rates, current inflation levels, and recession discussions, we believe the New Mexico ranch market in 2023 will remain strong. We are still talking with many capable Buyers looking for their next special place and who may have missed out on other opportunities in recent years. 1031 Exchange money, although less abundant than one year ago, remains an important factor in the market.

“High interest rates should theoretically slow sales and lower values, but so far it seems buyers are still acting aggressively, with many buyers bringing more cash or all cash. I’d guess overall ranch values stay fairly level (in 2023)”, according to one expert appraiser we surveyed.

New Mexico is likely to remain a strong option for ranch buyers as the price point remains friendly compared to neighbouring Mountain West states, which have seen an approximate 40%± price increase since 2020 compared to a more modest 23%± increase in New Mexico over the same time period. New Mexico ranch values have increased at a more sustainable level than neighbouring states which should help both Sellers find Buyers from suffering the negative effects of a price bubble. Whereas the data suggests land value increases have slowed or almost stalled since Q3 2022, we expect the peak values from 2022 to hold strong for 2023 here in New Mexico.

Attractive land prices, lower inventory and still-strong Buyer interest suggests that Sellers in New Mexico should continue to see success in marketing and selling their land investments. Although we see land values holding, time on market is beginning to increase as Buyers are not experiencing the same time pressures that we’ve experienced the past two years created by volume and velocity of ’21 and ’22 sales. A decreased presence of 1031 Exchange money will also add to a more extended time on market.

In Conclusion

Potential Sellers should understand that many interested cash buyers are watching the New Mexico market daily, waiting for the right opportunity to present itself. Quality ranch properties that are priced correctly are still in demand and will receive the most attention. At Beaverhead Ranch Group, we have a backlog of motivated, qualified Buyers looking for just the right offering to become available. If you have been considering selling a New Mexico ranch property, this is still a great time to capitalize. Economic, market and global pressures make it hard to predict what ranch sales will look like a year from now but all indications show us that we still remain in a strong position for land sales. See the inventory of BRG sold ranches.