Napa, Calif. -- Things are very quiet in real estate offices specializing in North Coast vineyards, says vineyard appraiser Tony Correia. "The markets are on pause. They've been stalled for six months," he says. "There have been no significant pure vineyard sales."

By contrast, the few transactions in Napa, Sonoma and Mendocino counties have been for wineries, such as the Foley Wine Group's deal to buy Sebastiani, which include some vineyards, or equity buys into wineries like Huneeus Vintners' recent partnering with Flowers.

Napa-based Silverado Premium Properties remains active, reportedly closing two deals in the last month. "They're in a unique position," Correia says. "No matter what happens, they buy and sell. They're the smartest guys in the business."

The situation has changed dramatically in the last six months, and Correia notes that he senses a lot of stress among winery owners with wine sales slowing down. "This will force some folks to make decisions, and we're likely to see the impact. Their wine hobby was fine when their other businesses were making money, but they can be expensive playthings now."

He notes that Bill Foley, whose group now owns Foley Estates, Lincourt Vineyards, Firestone Vineyard and Merus in California, plus Three Rivers in Washington, is one of the few wine individuals who seems very active. "He's in a unique position, title insurance. It makes money whenever anyone buys or sells--even if the buyers take a loss."

Correia presented his findings at the 2009 Spring Ag Outlook, the annual meeting of California Chapter of American Society of Farm Managers and Rural Appraisers on April 24, in Sacramento. The data is from surveys by American Ag Credit teams: Mike Pipkin for Lake and Mendocino counties; Hal Forcey for Napa; and Mark Gregg for Sonoma. It applies to 2008.

Napa vineyard property

Prices for Napa County vineyard properties planted on resistant rootstocks increased slightly in 2008 over 2007 with fewer transactions occurring, and limited properties available for sale. The predominant buyers included successful wineries and large vineyard investment groups. Diversity between the low and high valuations in the county is vast, however.

The best vineyards in the best areas continue to be in strong demand with values of $225,000 to more than $300,000 per acre. The secondary vineyard locations are seeing stable demand with values between $115,000 and $215,000 per acre. There has been limited activity in outlying areas including Pope and Chiles valleys, with values likely holding in the $55,000 to $75,000 per acre range and reduced demand.

The market for small vineyard parcels can be heavily influenced by the estate site component, but Correia comments, "The residential component of vineyards is definitely softening. If the value of a home site was $1 million, it's something less now." The current financial and economic crisis appears to have taken a number of buyers out of the market or placed them in a holding pattern. Fewer lenders are actively chasing transactions, and lending requirements are tightening.

The market for vineyard parcels can be heavily influenced by location, views, privacy or position on a main tourist route for wineries, too, and obviously for existing permits. These can influence value influences more than parcel size.

Demand for plantable land has remained strong, with values increasing slightly. Upland parcels with approved erosion control permits had the largest increase in value, due to the two to three year timeframe for obtaining the permits. Most of the developments are smaller in size. Most new plantings now are redevelopment of old vineyards.

Napa Vineyard Values

Prime Napa vineyards	$225,000 to $300,000/acre
Secondary Napa vineyards	$115,000 to $215,000/acre
Outlying (Pope, Chiles) vineyards	$55,000 to $75,000/acre
Los Carneros vineyards	$115,000 to $150,000/acre
Open land throughout county	$35,000 to $175,000/acre
Site contribution throughout county	$200,000 to $3.5 million/site

Sonoma County vineyard property

In general, prices for Sonoma County phylloxera-resistant vineyard properties in 2008 remained stable to increasing over 2007.

For Russian River Valley, western Sonoma Coast and Sonoma Carneros vineyards very strong demand led to record prices being paid for Sonoma County. This trend was driven by the demand for cool-climate Pinot Noir and Chardonnay used for luxury-priced wines.

The highest priced vineyards were high-density plantings being intensely managed for low production (2 to 3.5 tons per acre) with very high fruit quality that could demand $4,500 to $6,500 per ton. Resistant vineyard values in these areas ranged from $90,000 to $125,000 per acre. Pending sales in the last quarter of 2008 suggest values exceeding $125,000 per acre. Napa County wineries tended to be the primary buyers for these types of vineyards.

Vineyard values for the remaining primary Sonoma County viticulture areas, such as Alexander Valley, Dry Creek and Sonoma Valley remained fairly stable, with r esistant vineyard values of approximately $75,000 to $85,000 per acre. This stability was primarily a factor of grape prices in these areas strengthening but to a lesser degree in comparison to Russian River Valley, western Sonoma Coast and Sonoma Carneros.

Sonoma County clearly has secondary areas were vineyard values are substantially less in comparison to the primary viticultural areas. These areas typically include the Sonoma Coast viticultural area around the city of Petaluma, the non-vineyard designated areas east of Santa Rosa, or the mountainous terrain between western Sonoma Coast and Dry Creek Valley. Vineyard values in these areas are impacted by these properties' limited ability to obtain viable yields and/or above average prices that are needed at the low yields. The few vineyard sales in these areas suggest values ranging from $35,000 to $75,000 per acre.

There was a constant level of market activity for all vineyard property types. A successful vineyard investment group was the primary buyer for commercial vineyard properties located in the primary viticultural regions. Wineries and non-farm professionals, executives and business owners were also purchasing vineyards.

As for resistant vineyards, the demand for plantable land is divided. Russian River Valley, western Sonoma Coast, and Sonoma Carneros have been increasing. Readily plantable land in these areas has a general range of $60,000 to $80,000 per acre. Western Sonoma Coast plantable land is not included in this range, as it is usually mountain terrain requiring greater development costs. Plantable land values in the other prime growing regions range from $45,000 to $52,500 per acre. Secondary area plantable land values can range from $5,000 to $20,000 per acre.

Mendocino and Lake counties

The market activity in Mendocino and Lake counties has been very mixed. Lake County had a few very high sales, a few low sales and couple in the middle of the range. Good quality vineyards in Lake County ranged for $20,000 to more than $40,000 per acre for commercial-sized properties. The few mid-range vineyards were around $30,000 per acre.

Mendocino County is divided into two separate regions. The inland section along the Highway 101 corridor had very limited sales activity. The few sales indicate a general stable market.

Anderson Valley, on the other hand, has been very active. The demand for Pinot Noir in Mendocino County has remained exceptionally strong, especially in Anderson Valley. Every sale seems to set another record price for vineyards in Mendocino County. The area continues to attract buyers from Napa and Sonoma counties for the high quality Pinot Noir. Values for top quality vineyards have exceeded $75,000 per acres.

Mendocino Vineyard Values

Anderson Valley vineyards	$50,000 to $75,000/acre
Inland Mendocino vineyards	$30,000 to $36,000/acre
Anderson Valley plantable	$20,000 to $30,000/acre
Inland plantable	$10,000 to $15,000/acre
Site contribution throughout county	$200,000 to $500,000/site

Vineyard listings are at all-time highs in Mendocino and Lake counties, with very few buyers.

The value trend for commercial open land, obsolete vineyards and interim AxR1 vineyards appears to have remained generally stable, with very limited activity. AxR1 vineyards with interim viability were allocated value at a substantial discount in comparison to resistant vineyards. Most AXR plantings contribute less than $10,000 per acre.

The demand for plantable land in Lake and interior Mendocino County has been weak. Very few buyers are looking for plantable land to develop additional acreage. The exception is Anderson Valley, where numerous small developments of Pinot Noir continue to emerge.

"It's a good time to buy if you have the money," Correia says. "Credit is tight and expensive, but available."