Farmers Sold Out During Housing Boom; Now Banks Own Many Farms and Refuse to Sell at Reduced Prices

As the Housing Boom Dies Out, Land Prices Drop

April 4, 2010

The Plainfield Sun - Michael Garrigan has seen the price of land plummet as much as 75 percent from a high of $110,000 an acre in the past couple of years.

Garrigan, who has been Plainfield's village planner since 2002, almost can't believe how quickly prices skyrocketed, then crashed during his eight-year tenure.

"I've seen the boom and the bust," he said.

From about 2002 through 2005, Plainfield was one of the fastest growing communities in the country. But the housing bubble burst, and what some are calling The Great Recession, sucked the life out of residential development in Will and Kendall counties, which were among the fastest growing counties in the nation.

"Now developers are having property foreclosed on," Garrigan said. "That is unfortunately the new norm in this economy."

And in the newest twist on the topsy-turvey real estate market, farmers who sold land to developers are now buying or leasing it back to plant crops.

Sell high, buy low

When the market was hot, Gus "Butch" Rousonelos, whose family has farmed in Plainfield since 1963, sold farmland for $92,000 an acre. More recently, he bought different land for $14,000 an acre.

The 160 acres he sold to Macom Corp. was part of the former Updike farm, south of 135th and east of Plainfield Road in Kendall County.

The 120 acres he purchased had been sold by another farmer to Lakewood Homes for the LaBancz subdivision, which would have been north of Route 126 and east of County Line Road in Will County.

"We were lucky," he said of the timing. "It was fortunate for us, not so good for the developers. But they're big boys."

Rousonelos, who no longer farms the land he owns, said during a phone interview if he hadn't sold when he did,

"Instead of being in Sedona, Arizona, I'd be in Plainfield."

Not all farmers were so lucky, he added.

"For the person who didn't sell, but had the opportunity, they'll be second-guessing themselves for life," he said.

Rousonelos said he would buy back the Updike farm, but the bank that now owns the property still wants too much money per acre.

Screeching halt

Garrigan cited the McMicken subdivision as an example of how far the market has reversed. Midway through the last decade, the 673-acre subdivision was zoned for 1,339 housing units, he said. The subdivision was going to be built in Kendall County on land south of 135th Street, north of 143rd Street and between Route 30 and Plainfield Road.

Now the land has been taken back by the bank and real estate signs posted along 143rd Street and Plainfield Road advertise the land is for sale, Garrigan said. Until it sells, the land will be farmed.

The LaBancz subdivision would have included about 300 homes to be built by Lakewood Homes, Garrigan said. But now that land, too, has been taken back by the bank and is for sale.

Plainfield isn't the only municipality to see housing developments stalled or foreclosed. Joliet, too, has similar issues, especially in the Kendall County portion of the city, said City Manager Tom Thanas.

Some planned subdivisions that were never developed can be resold to farmers, he said. But other parcels that were partially developed may have to sit and wait for the housing market to bounce back, Thanas said.

Holding tight

Mark Schneidewind, manager of the Will County Farm Bureau, sees a similar pattern happening in "pockets" all over the county. Farmland that was selling for an average of $45,000 to $65,000 an acre in some areas is now going for $5,000 to $7,000 a acre, he said.

At one time, county officials worried that too much farmland was disappearing to homes. But that worry has withered, Schneidewind said.

"It's good to see the farmland staying and not being developed," he said. "We need to keep our food system going and we're doing that locally."

Recently, Schneidewind said he heard of one developer in the eastern portion of the county who signed a three-year lease with a farmer to farm land previously set for development.

Developers who aren't bankrupt and who haven't had land foreclosed are holding tight, waiting for better times, Schneidewind said. But it might be a while before things get back to normal, he added.

"Will it pick back up? Yeah. But it will be 7-10 years before we see that turnaround," he said.

Chipping away

Plainfield's Garrigan said some projects in the village are moving forward -- slowly.

"Nobody in their right mind things this is going to last forever," he said. "... It's by no means all doom and gloom."

For instance, Gladstone is continuing to build homes in the Chatham development along 127th Street. And Cambridge Homes is continuing to build townhomes at Patriot Square north of downtown, he said.

But the slowdown has really hurt the village's budget. Impact fees, which once brought in $8 million to village coffers, have mostly been eliminated and totaled only $35,000 last year, Garrigan said. And building permits dropped from a peak of around 1,500 in 2004 to 65 last year.

"That speaks for itself," he said.

Municipalities aren't the only ones suffering. Garrigan said he knows builders who bought lots for $100,000 or more to build a spec home. Now, the lots are worth much less.

"Are there builders, developers and homeowners underwater in Plainfield? Of course there are. That's a terrible fact in today's economy."