While lower interest rates are certainly welcome to those of us with mortgages and loans, they might not be so great for some of our other longer term economic woes.
The price of land in the Townships is already high—often too high for farmers to afford it on their farm income. Will diminishing interest rates increase demand for property in the Townships and therefore prices? If land values further increase, will food and housing costs rise even more?
It was a neighbouring sugar producer who made that link between interest rates and land prices for me some months ago, noting that high interest rates might actually be a good thing to control our land values. I then learned at the Cookshire Fair that a couple of local farmers are indeed being pushed off their land by the high value of farmland.
For 15 years, the young couple invested in their herd and the farm they were renting, in the hopes of one day buying it. But when the owner died, the successors sold to the highest bidder. The young couple offered close to two million dollars, but the property sold for more than two million. Three lots were then divided, and the speculator who purchased it turned around and put them up for sale, including the house.
Not wanting more trouble than they’ve already had, the couple asked to remain anonymous. They admitted they weren’t sure how they would have made payments on their offer, considering the gap between the land value and what they earn on and off the farm.
Asked about the problem at a funding announcement in Saint-Isidore in August, federal Minister Marie-Claude Bibeau acknowledged the problem. “It’s true that land values have increased significantly in recent years,” she said. “It’s true that it’s a major challenge.”
In British Columbia, the government charges an additional tax on transfers of property by foreign entities, to try to cool down high real-estate values. Should we have the same, for non-occupant owners of property? She would go further and offer a lower interest rate to buyers who will occupy their property, be it farmland or otherwise?
In response to questions about land values and interest rates that I put to Ayer’s Cliff economist and Record columnist Dian Cohen, she wrote, “Around here (Hatley area), my farmer friends say that it’s very hard for a young farmer to buy a farm… If the farm is owned by a stranger, they will ask a higher price than they would if they were selling to a family member. Even if the buyer is a family member, the purchase is difficult because of the high price of farmland and interest rates.”
Brome Village farmer Meagan Patch wrote, “I’m told that land values locally are too high to be able to support agriculture; in general, I think this is true. Especially if you consider the level of debt many are operating under… The relationship between food prices and farm viability is worth researching. Technically speaking, I don’t think most farms are profitable. Many survive because of subsidy programs. Bottom line: corporations are making the money; farmers are burning out and getting out.”
Like farmland, housing prices have also grown out of reach, in turn causing high apartment rents. On our farms, the gap between incomes and costs are very difficult to bridge.
Something’s gotta give.
Laisser un commentaire