With high-end recreational ranches, no signs of a bubble

Two Creek Ranch near Preston is a working ranch with a fishing stream and a 7,500-square-foot house. It’s listed at $3.9 million. Photo courtesy of the Swan Land Company.

While the regular residential market – the one for three-bedroom houses with yards – is red-hot right now, things are moving at a more measured pace for buyers and sellers of multi-million-dollar ranches with cattle, mountain views and rivers.

Western agents have dozens of enticing properties listed, many of them around the $5 million mark. While they saw a rush on such properties in the run-up to the last recession, people are a little more cautious this time around, and are looking for properties that they will be able to sell if they need to.

Around 2005 and 2006, “they were just coming out of the woodwork and paying these crazy prices, and prices before that were going up 7 percent, 8 percent a year, and all of us thought it was crazy and can’t go on,” said Sam Sanders of the Bozeman, Montana-based Swan Land Company.

The real estate crash and recession that started around 2007 hit ranch and agricultural properties hard.

Carlos Ordonez

This time around, buyers are clearly using lessons learned. Sanders has been trying to sell a 230-acre property called Two Creek Ranch near Preston, which includes a 7,500-square-foot home, a fishing stream and a pond, for two years. It started at $4.4 million, and now it’s down to $3.9 million.

“To sell, it has to really reflect value for the buyer,” said Trent Jones, a Ketchum agent for the Denver-based Hall and Hall real estate agency.

“Buyers aren’t going to overpay,” said Jones. “They want to feel like they are paying a price that is defensible in the marketplace.”

The strength of the recovery varies from one market to the other,  said Carlos Ordonez, an associate broker at Live Water Properties in Driggs, near Idaho’s border with Wyoming.

“It depends on where you are in the state, but overall in our areas and markets of expertise, the recovery from the boom to bust has been a bit slower than many of the more well-known resort communities in Montana, Wyoming and Colorado,” Ordonez said.

“Even during the boom cycles, our high-end ranch real estate markets have typically lagged by a year or so behind the bigger names,” he said. “The buyer pool for high-end markets is still pretty small.”

The pool of high-end ranch properties is also small. The buying frenzy 10 years ago drove up prices in well-known communities like Jackson Hole, Wyoming, Sun Valley, and Bozeman, Montana and that pushed buyers into more remote areas, said Jones. But he said many of the typical ranch buyers still want to find a property that’s fairly close to a resort community, and there’s a limited supply of those, especially in Idaho, where about 70 percent of the land is owned by the state or federal government. Much of the land in the Snake River Plain is in irrigated, working farms, leaving a limited supply of big ranches with rivers and mountain views.

Trent Jones

“Idaho is a state with a lot of remote areas that are beautiful, that have a lot of the attributes that these lifestyle ranch buyers are looking for,” said Jones. “But if they’re living in Dallas, Texas or Greenwich, Connecticut or Atlanta, Georgia the idea of having to get to Idaho and then travel two to three hours from a commercial airport to get there … it’s pretty restricted.”

Among the larger ranch agencies, there aren’t as many Idaho recreational properties for sale as there are properties in states like Montana, Wyoming, and Colorado.

“Idaho offers all of the same recreational amenities you will find in these other states and the settings are just as spectacular,” Ordonez said. But “quite frankly, I just don’t think Idaho has been on everyone’s radar when picturing these expansive mountain views with pristine trout water flowing through the valley.  People tend to latch on to the states they typically see in movies or some of the more popular ski resorts communities they have been to.”

A look at ranches on Hall and Hall’s website shows most are out of reach of ordinary people. But purchasers rarely end up paying the initial asking price for a high-end ranch, said Sanders.  An 1,800-acre property outside of Jackson, Wyoming, on the Snake River, with views of the Grand Tetons, that started at $100 million a few years ago, eventually sold for $30 million, Sanders said.

“To get full price for something is very rare – I’ve done it occasionally in my 25 years,” Sanders said.

The most expensive western ranch that Sanders can think of on the market right now is the Susie Q near Sun Valley, which has 537 acres and a river running through it. The ranch, listed by Hall and Hall, has an asking price of $9.25 million.

Ordonez has been showing a property called the Great Yellowstone Legacy Ranch, a 630-acre property near Ashton on the market for $6.6 million that abuts the National Forest on three sides and, beyond that, Yellowstone National Park. The ranch includes a home, a guest house, and a bridge over the Fall River that Ordonez estimated cost $1 million to build.

“These ranches don’t make money; most of them lose money,” said Sanders, who sells properties in Utah, Idaho and Wyoming. “If you work it right, you can turn a ranch like this into a write-off.”

While the market changes, buyer preferences stay pretty much the same, brokers said. Many of the shoppers they talk to are looking for a place where they can fish in private. Proximity to national parks like Yellowstone and to resort cities and skiing are a plus; so are mountain views.

My own private Idaho river

Colorado and Wyoming water laws make it easier for private landowners to fish without sharing their stretch of water with anyone else. In those states, the public can float through a private landowner property, but can’t get out and fish there. In Idaho and Montana, Carlos Ordonez said, the state owns the riverbed and the water, so the landowner only possesses the land up to the high water mark of the river.

A rainbow trout. File photo.

But “Idaho still has some pretty private fisheries,” Ordonez noted. “If you get into the big name rivers, like the Boise, the South Fork, Henry’s Fork, people come from all over the world to fish those rivers and you won’t get the privacy. But there are smaller, lesser-known rivers that are navigable that just don’t get much fishing pressure.”

Jones said that remoteness plays a larger part than the state’s water rules.

“Whether they’re in Montana or Idaho or Colorado or Wyoming, what we’re talking about is a property with a length of stream where you’re far enough away from a public access point that you have de facto control over stream reach,” he said. “What people really want, and only the wealthiest can afford, is the properties that basically control a section of stream that provides good fishing.”