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Farm sales tough for 2011, but situation should improve, Lexington Realtor says


 

The rolling farmland surrounding Lexington is as much a part of the area’s identity as the University of Kentucky and Keeneland.

 

From time to time, those properties change hands, and for 31 years, Justice Real Estate has specialized in getting them sold.

 

KyForward recently discussed the current economic situation and how it has affected farms with the company’s founder, Bill Justice.

 

Are more farms for sale now than before the economy went downhill?

 

There are always a lot of farms for sale. Every spring people see the signs pop up.

 

By and large, there may be slightly more farms on the market today. We peaked out in farm activity and farm sales in 2007, but in 2008, I still had several large farm sales.

 

We have been in a decline for not quite four years.

 

What are the reasons people usually sell their farms?

 

There are no point-blank black-and-white answers. But farm ownership and the farm market are attributed to two things: how the horse market is doing and how the economy is doing.

 

We have so many absentee owners where the horse business is not their primary business. So if their primary business is down, the first thing that goes is that second home or farm.

 

The economy itself will force some farms to go on the market, and of course the horse business has been in decline for several years. That has forced those who derive their living from the horse industry to sell.

 

What does an acre go for these days?

 

It is hard to say because it is always about location, size, quality and improvements.

 

You can have 20 stalls, but a 20-stall barn can be a $100,000 barn and it can be a $2 million barn. You give people the wrong idea when you throw out an average per-acre price.

 

Are there regulations when it comes to farm preservation in Fayette County?

 

We have a purchase of development rights program.

Fayette County went from being able to subdivide farm land into 10-acre tracks, and now the minimal regulation for agricultural land is 40 acres.

 

When they did that, the government, with matching funds, started a purchase of development rights program.

 

They do it on an annual basis. Farms will submit their farm and agree not to develop the farm in perpetuity. Then you also have the Bluegrass Conservancy.

 

What is the future for farm real estate?

 

We had eight buyers above the $3 million range looking in the month of March this year. Four of those farms have gone under contract. I think as much as anything, it was people realizing it was a good time to buy.

 

I still think 2011 is going to be a very tough year. A lot of people, a lot of my friends, are hurting.

 

Banks have taken away their credit lines. They made them sell their horses, which they used to pay their mortgages.

 

They pledged their land against their horses, and now the horses aren’t worth 50 percent of what they were.

 

It is still going to be a very tough year, but we are encouraged that some high-end people have taken some high-end farms off the market.

 

What about the fear that well-known farms will be developed?

 

I think that is a misconception. People talk about farms going in for subdivisions … (like) when they were doing Hamburg.

 

That is more the exception than the rule. There are always significant farms that are for sale that aren’t advertised.

 

Do auctions hurt the value of property?

 

It depends on what you are auctioning. Sometimes people perceive auctions not to bring true value, but in many instances, it will bring value, and sometimes it will bring more than value.

 

I think there is a perception that when you auction land, you are going to get a deal. That is good because you get people there in the heat of the battle.

 

The true indicator is an absolute auction. That way you can really attract out-of-state and out-of-country buyers, which is what Central Kentucky has.

 

If you do an auction with a reserve, those people tend not to show up.

 

What does farmland mean to the area? Tourism is such a big component of Central Kentucky, and we are unique in that private land owners are maintaining these beautiful farms minutes off the interstate and downtown.

 

Lexington is very special, and I don’t think we can lose sight of that.

 

Everyone — from businesses, restaurants, hotels, car dealerships, etc. — we all benefit from the horse industry. It is so unique, and we can’t let it get away from us.

 

Being the Horse Capital of the World, being the capital of anything in the world, is significant. It is something we ought to treasure and protect forever.

 

By Amanda Duckworth

amanda@kyforward.com

 

“Tell Me About It” is an occasional KyForward question-and-answer feature. We meet with interesting community members and let readers see the interview. If you would like to suggest someone for this feature, email news@kyforward.com.

 


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