Here at Montana Land Source, we have been receiving an increasing number of inquiries about what impacts the coronavirus may have on the Montana land market. This crisis has created a great deal of overall uncertainty, which impacts many aspects of our lives, and the Montana farm and ranch land market is no exception. There are multiple factors to consider.
Anything that causes economic uncertainty tends to dampen the Montana land market, at least temporarily. The purchase of land is typically a large financial decision for buyers, and involves some inherent risk. With economic uncertainty comes heightened concern about risk and risk aversion. The final impact of the virus on the economy and financial markets is yet unknown, and in light of this many may choose to take a wait-and-see approach and stay out of the market. Potential land buyers who have entered into land purchases may back out, and buyers who otherwise would be entering into new land transactions may decide to wait. Until there is some indication of the full extent of the crisis, some buyers will stay on the sidelines.
The Montana land market is strongly tied to the national economy, so any downturn in the national economy impacts the land market. However, the land market is much slower than other markets, as individual land transactions can take months to complete. If the overall economic impacts of the coronavirus are short in duration, the impact on the land market may be minimal. The timing of the epidemic is unfortunate for sellers and marketers of Montana land, because the land market does have a peak season with spring and summer being the prime times to show property. Land brokers are typically striving to get properties listed now in order to be ready for the upcoming prime showing season. If buyers stay on the sidelines through the prime marketing season, that certainly could impact the year as a whole for the land market. Then again, the crisis may largely pass in time for the showing season.
In contrast to the potential negative impacts, in such times of economic uncertainly people often gravitate towards tangible investments such as gold and land. Given the health fears and social distancing caused by this crisis, land in rural western states like Montana have a particular appeal. In addition to historically being a stable and lucrative investment, land in Montana provides a physical place where owners can take refuge from the rest of the world, whether that's global pandemics or social unrest. For years Montana land has been sought out for these reasons. The shock and uncertainty of this crisis may well lead to increased demand for physical and economic refuge in the form of investment in rural land.
The ultimate impact of the coronavirus on the Montana land market will largely depend on the length of the crisis and the depth of its economic impact. If the crisis is short-lived and the economic impact minor, we don't expect the impact on the Montana land market to be substantial. The slower moving land market may not have a chance to react before the crisis has largely passed. Additionally, the drive towards more stable and tangible assets that crises like this create may offset negative impacts. However, if the crisis is prolonged and if the economic impacts are severe, we will expect to see impacts on the Montana land market. Montana Land Source has the most comprehensive data tracking of Montana land listings and sales, and we look forward to reporting on actual market impacts as the year progresses. Stay tuned.