The influence of net real estate income and other property characteristics on prices of agricultural properties within and among selected areas of Oregon, 1965-69

Graduation date: 1972Concern over the apparent disparity between the farm use value\ud and current market value of property in agricultural areas continues\ud to remain a source of concern in many areas. This concern has\ud intensified in recent years, particularly in those agricultural areas\ud situated near urban centers and recreational areas.\ud The main thrust of the study was directed toward determining the\ud relationship between net real estate income per acre and sale price\ud pier acres of properties in selected agricultural areas of Oregon.\ud Three areas, ostensibly called agricultural areas, were selected for\ud analysis. The areas, as classified, included a basic agricultural\ud production area (dry land grain area in northcentral Oregon), an urban-recreation\ud influenced area (Douglas County in southwestern Oregon\ud bordered by the Pacific Ocean on the west and the Umpqua National\ud Forest on the east) and an urban influenced area (Marion County in the\ud populous and productive Willamette Valley in northwestern Oregon).\ud In addition to determining the influence of net real estate income\ud on property prices, the influence of other property characteristics on\ud property prices was analyzed in each area. The other property\ud characteristics included: year of sale, number of acres in sale,\ud assessed value of buildings per acre, miles to nearest paved road,\ud and miles to nearest town of at least 1,000 population.\ud Simple and multiple linear regression models were used to\ud analyze the influence of particular property characteristics on sale\ud price per acre. The same six-variable model was used in each area\ud to test whether partial regression coefficient values on corresponding\ud variables differed significantly among areas. Overlapping of 95 percent\ud confidence intervals around corresponding partial regression\ud coefficient values among areas was observed for all independent\ud variables except net real estate income per acre. The income\ud variable was an important determinant of sale price per acre only\ud for grain area and Douglas County sales. However, the partial\ud regression coefficient value of 49.71 in urban-recreation influenced\ud Douglas County implies an approximate 2.0 percent capitalization\ud rate compared to a coefficient value of 17.11 and a 5.8 percent\ud implied capitalization rate in the grain area.\ud Year of sale was an important influence on sale price per acre in\ud areas influenced more strongly by nonagricultural influences, i.e.,\ud Douglas and Marion Counties, as evidenced both by the level of significance\ud of the coefficient value and the value of the coefficient in each\ud of these areas. The annual rate of property price appreciation at the\ud mean was 14.3 percent in urban-recreation influenced Douglas County\ud and 12.1 percent in urban influenced Marion County. While not significantly\ud different from zero, the rate of price change was slightly\ud negative in the grain area.\ud Conclusions from the study were (1) that there is a significant\ud difference in the influence of net real estate income and other property\ud characteristics on prices of properties among selected agricultural\ud areas of Oregon, (2) that the nature and degree of relationship between\ud prices oi property sales analyzed and property characteristics of these\ud sales varied considerably within each agricultural area selected for\ud analysis, but especially in the urban-recreation and urban influenced\ud areas, and (3) that in spite of relatively low mean rates of return in all\ud three areas studied, a disparity between the farm use value and current\ud market value of land was found to exist only in urban-recreation\ud influenced Douglas County.\ud Implication of these results are that variously influenced agricultural\ud areas do exist, and that motives for and sources of satisfaction\ud from ownership of property in agricultural areas vary within and among areas