Land Smart Resources

Question: One way to increase the value of any property is to put in roads, ponds and green fields. How do these improvements increase the value of the property?
Brickman: These amenities can dramatically increase property value, depending on the property. Ponds and lakes are very desirable for individuals buying rural properties. Many buyers are recreational buyers. They want a place to go with their families, children and grandchildren, and a lake is part of their vision for the place where they take their families. Good roads that allow owners to move around on the property are a major factor in determining the value of a property. If you’re a hunter or enjoy viewing wildlife, the mix of hardwood vs pine and open vs timbered will play a strong role in determining the value of a property to that person.

Question: What has the timber market been like in the past, and what do you perceive it to be like in the future for investors who buy timberlands?
Brickman: The timber market right now is mixed. If you’re a landowner, and you have pine trees that are at sawtimber size, the market is very poor right now. Pine sawtimber is primarily used to make boards for housing construction.  New housing construction is off about 75% from where it was 5 years ago. Consequently, so is the value of pine sawtimber and we’re advising our clients with pine sawtimber to be patient if they can – the trees keep growing & the markets will be back – possibly with a vengeance.  There is still good demand for trees to make pulpwood – that is, trees that can be used to make paper (smaller and poorly formed trees). We have three pulpwood sales ongoing right now and we’re seeing good prices.  Prices for pulpwood doubled and tripled over a 6 week period in the fall of 2008.  They’re not that high now, but still good compared to the past 5 years.

Question: Why has there been such a dramatic increase in demand for rural properties?
Brickman: If you look at trends starting in the 1990s, you’ll see there is a growing interest in hunting and other outdoor activities.  There is also a growing interest in the environment and a rural life style.  A just-published USDA study shows a significant increase in the number of farms in Alabama since 2000 – especially among women.  The demand for Alabama land has also been impacted by the natural disasters in Florida and coastal Mississippi and Louisiana.  Many people in Georgia and other parts of the country view Alabama land as a bargain in comparison to local land, so we’re seeing a lot of Georgians buying in Alabama, especially in the border counties.

The counter-part to your question concerns a matching increased availability of land to buy.  This is due to a couple of factors.  Over the past 15 years over 30 million acres owned by paper companies in the south has sold to financially driven investors – mostly institutional pension funds.  Paper companies never sold land, but financial investors do as a normal course of business.  Also, there is a generational ‘wave’ of succession beginning.  A 1997 US Forest Service study shows that the average age of timberland owners is close to 60 years.  These ‘boomers’ are now facing life-transition issues that will force land to the next generation or to the market.

In the big picture, the people of the southern United States have a land ethic and land-use policies that favor private ownership.  About 95 % of southern lands are in private hands that are only a few generations removed from living on the land.  This compares with about 50% private ownership in western states.  Many of my clients still remember that land was how granddaddy survived.  So, there is a point of view in this part of the world against government interference in the use of private lands.  This is especially a hindrance in western and northeastern states where there is much greater public influence on the use of private lands.  People see this freedom and are attracted to our southern lands.

To learn more about Land Smart Resources, go to www.LandSmartResources.com, call 205-936-2160, or email tbrick@LandSmartResources.com.