Globalized Real Estate Market Threatens Idaho’s Way of Life: The Case of Agricultural Land
Idaho First real estate and land policies are needed in this time of global markets, international billionaires and huge real estate equity firms.
Real estate and land prices in Idaho are through the roof. The more demand there is, the higher the price. Who is doing the demanding? Answer: increasingly foreign interests are buying privately-held agricultural land and real estate and driving up prices.
This is a complicated story. Oligarchies thrive on making things complicated, so that the common man or even the observant citizen cannot know what is going on around him. The concentration of wealth and the erosion of national sovereignty are happening through many mechanisms at the same time. Many of those mechanisms could easily be confused with the free market. Oligarchs use the free market to gather power to the detriment of everyone else.
Real estate provides one such mechanism for the gathering of global oligarchic power. Today we talk about soil and agricultural land. Housing comes next week.
The United States is very open to foreign investment in real estate and farmland. Asian countries (excluding Malasia) prevent foreigners from owning property, and Mexico also makes it very difficult to buy land; European laws are all over the place. Foreigners and Americans alike can buy for agricultural land or real estate on the market. Our anti-discrimination laws even prevent owners from knowing who is bidding on their property. As a result, foreign Investments in the United States land has increased more than 100% since 2020. The United States is ground zero for global ownership of a nation’s precious land and real estate. Idaho itself is also uniquely open to foreign purchase of all types of real estate--since our laws guarantee to foreigners the right to purchase our land and houses without regulation.
The United States has also experienced an amazing concentration of land ownership over the past fifteen years. As the New York Times reports, the one hundred largest private landowners own 50% more than they did in 2007. These one hundred owned 27 million acres of land (the size of Maine and New Hampshire) in 2007, but more than 40 million acres in 2017—more than the entire area of New England.
The concentration of land and real estate in ever fewer hands makes land and real estate much more expensive for everyone else. The value of agricultural land has skyrocketed since the end of the Cold War. Since 2007, the price per acre of crop land has risen from $2,530 per acre to $4,420 per acre in 2021. Idaho’s increases have of course far outpaced national increases. Idaho cropland has increased 9.3% in value since 2017.
Federal law requires that all foreign investors who acquire, transfer or hold an interest in U.S. agricultural land to report their holdings. At the end of 2019, foreigners owned 2.7% of America's agricultural land. That number is rising. By the end of 2020, the number was 2.9%. The number will be well above 3% when 2022 ends. According to the most recent statistics, Canada owns nearly 30% of the foreign-held agricultural land in the country, followed by the Netherlands (14%), Italy (7%) and Germany and Great Britain (6%).
National legislation to restrict China from buying agricultural land was introduced in 2020 (and Chinese investment has increased ten-fold across the country in the past decade), but China is not much of a player in Western agricultural land. China is gobbling up land in the Midwest instead—buying meat plants and adjacent feed fields. Still, there is nothing unique to China buying our land: why should any foreigner hold land in America?
Even in Idaho
Idaho has traditionally not had high levels of foreign ownership of farmland (see figure 2). As of the end of 2020 (the last year of good data), foreigners owned about 120,000 acres of Idaho’s nearly 16 million acres of privately held agricultural land, about 0.8%. This contrasts with other states like Maine (19.5% is foreign owned), Washington and Oregon (over 7%), Alabama (over 6%), and Florida (nearly 6%). The largest holders of Idaho land are Britain, Germany, and Canada, which hold about 35,000 acres of Idaho farmland.
Foreign interest in Idaho farmland is not evenly distributed across the state. Certain counties have attracted more foreign investment, greatly affecting land prices and real estate in those locations. Foreigners own more than 10,000 acres in six counties, Bingham, Bonneville, Caribou (18,000 acres), Fremont (over 18,000 acres), Power (nearly 21,000) and Washington, five of which lie in eastern Idaho.
A German company, Bayer AG owns more than 10,000 acres of Caribou County farmland, while much of the foreign investment in Teton County, where the costs per acre of land are three times the national average, are about foreign elites wanting to be close to Jackson Hole, Wyoming. Power County appears to have attracted French firms interested in taking advantages of American subsidies for wind power.
Think about what is happening in these areas of foreign investment. Idahoans are priced out of their markets. Their children cannot buy land in Teton County anymore. Who benefits? The foreigners who gobble up the land and the developers who get to build their chateaus. This is how oligarchy comes to America.
Idaho's government is on the side of the foreign investors and developers too. While Idaho has not traditionally been on the radar of foreign investors, Idaho’s Commerce Department is trying to change that. They have developed a Gem State Prospector tool to help match direct foreign investors with real estate information of all kinds. The tool, for instance, is looking for foreign investors to help build-out the Wieser airport. Our laws also provide maximum encouragement to foreigners who would own Idaho's land.
This is driving up prices for everyone. More importantly Idaho's recruitment of foreign investment and its easy laws will put Idaho's precious land resources in the hands of people who are not Americans or Idahoans. No one benefits from this except, perhaps, our local developers, who, in the short term, get to build the projects that foreigners want to build. And the politicians who support these developers benefit as well. Gov. Brad Little and his family spearhead many such development enterprise.
A change in law making it more difficult for foreigners to buy Idaho property would foster a change in the spirit in our leaders. The threat is real and imminent. Other states such as Iowa have passed model laws, to some effect, and Idaho should follow suit.