IDEAS home Printed from https://ideas.repec.org/a/uwp/landec/v90y2014iii1p395-410.html
   My bibliography  Save this article

Forced Sales and Farmland Prices

Author

Listed:
  • Silke Hüttel
  • Simon Jetzinger
  • Martin Odening

Abstract

We analyze farmland prices in the German federal state of Brandenburg from 2000 to 2011 with the aim to understand the price formation process in farmland foreclosures. Pressured sales usually result in a price discount due to time constraints; however, the land is sold using public auctions. This may lead to a price premium. Since the effect of a foreclosure on farmland prices is ambiguous, we empirically quantify the overall effect. We use matching techniques and a regression-based approach. We find that on average, price premiums are realized, though the effect depends on prevailing land market conditions.

Suggested Citation

  • Silke Hüttel & Simon Jetzinger & Martin Odening, 2014. "Forced Sales and Farmland Prices," Land Economics, University of Wisconsin Press, vol. 90(3), pages 395-410.
    • Handle: RePEc:uwp:landec:v:90:y:2014:iii:1:p:395-410
    as

    Download full text from publisher

    File URL: http://le.uwpress.org/cgi/reprint/90/3/395
    Download Restriction: A subscription is required to access pdf files. Pay per article is available.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. James J. Heckman & Hidehiko Ichimura & Petra E. Todd, 1997. "Matching As An Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 64(4), pages 605-654.
    2. Daniel C. Quan, 2002. "Market Mechanism Choice and Real Estate Disposition: Search Versus Auction," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 30(3), pages 365-384.
    3. Clapp, John M & Rodriguez, Mauricio, 1999. "Erratum: Spatiotemporal Autoregressive Models of Neighborhood Effects," The Journal of Real Estate Finance and Economics, Springer, vol. 19(1), pages 1-85, July.
    4. James Heckman & Salvador Navarro-Lozano, 2004. "Using Matching, Instrumental Variables, and Control Functions to Estimate Economic Choice Models," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 30-57, February.
    5. John DiNardo & Justin L. Tobias, 2001. "Nonparametric Density and Regression Estimation," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 11-28, Fall.
    6. David A. King & J. A. Sinden, 1994. "Price Formation in Farm Land Markets," Land Economics, University of Wisconsin Press, vol. 70(1), pages 38-52.
    7. Myles Patton & Seamus McErlean, 2003. "Spatial Effects within the Agricultural Land Market in Northern Ireland," Journal of Agricultural Economics, Wiley Blackwell, vol. 54(1), pages 35-54, March.
    8. Heckman, James J. & Vytlacil, Edward J., 2000. "The relationship between treatment parameters within a latent variable framework," Economics Letters, Elsevier, vol. 66(1), pages 33-39, January.
    9. Feng Xu & Ron C. Mittelhammer & Paul W. Barkley, 1993. "Measuring the Contributions of Site Characteristics to the Value of Agricultural Land," Land Economics, University of Wisconsin Press, vol. 69(4), pages 356-369.
    10. Thomas W. Mitchell & Stephen Malpezzi & Richard K. Green, 2009. "Forced Sale Risk: Class, Race, and The 'Double Discount'," Working Paper 9098, USC Lusk Center for Real Estate.
    11. Marco Caliendo & Sabine Kopeinig, 2008. "Some Practical Guidance For The Implementation Of Propensity Score Matching," Journal of Economic Surveys, Wiley Blackwell, vol. 22(1), pages 31-72, February.
    12. Breustedt, Gunnar & Habermann, Hendrik, 2010. "Einfluss Der Biogaserzeugung Auf Landwirtschaftliche Pachtpreise In Deutschland," 50th Annual Conference, Braunschweig, Germany, September 29-October 1, 2010 93937, German Association of Agricultural Economists (GEWISOLA).
    13. Robert W. Paterson & Kevin J. Boyle, 2002. "Out of Sight, Out of Mind? Using GIS to Incorporate Visibility in Hedonic Property Value Models," Land Economics, University of Wisconsin Press, vol. 78(3), pages 417-425.
    14. John Y. Campbell & Stefano Giglio & Parag Pathak, 2011. "Forced Sales and House Prices," American Economic Review, American Economic Association, vol. 101(5), pages 2108-2131, August.
    15. Mendelsohn, Robert & Nordhaus, William D & Shaw, Daigee, 1994. "The Impact of Global Warming on Agriculture: A Ricardian Analysis," American Economic Review, American Economic Association, vol. 84(4), pages 753-771, September.
    16. Mayer Christopher J., 1995. "A Model of Negotiated Sales Applied to Real Estate Auctions," Journal of Urban Economics, Elsevier, vol. 38(1), pages 1-22, July.
    17. James J. Heckman & Jeffrey A. Smith, 1999. "The Pre-Program Earnings Dip and the Determinants of Participation in a Social Program: Implications for Simple Program Evaluation Strategies," NBER Working Papers 6983, National Bureau of Economic Research, Inc.
    18. Raymond B. Palmquist & Leon E. Danielson, 1989. "A Hedonic Study of the Effects of Erosion Control and Drainage on Farmland Values," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(1), pages 55-62.
    19. James J. Heckman & Hidehiko Ichimura & Petra Todd, 1998. "Matching As An Econometric Evaluation Estimator," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 65(2), pages 261-294.
    20. Marcus T. Allen & Judith Swisher, 2000. "An Analysis of the Price Formation Process at a HUD Auction," Journal of Real Estate Research, American Real Estate Society, vol. 20(3), pages 279-298.
    21. D Maddison, 2000. "A hedonic analysis of agricultural land prices in England and Wales," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 27(4), pages 519-532, December.
    22. Pace, R Kelley & Barry, Ronald & Clapp, John M. & Rodriquez, Mauricio, 1998. "Spatiotemporal Autoregressive Models of Neighborhood Effects," The Journal of Real Estate Finance and Economics, Springer, vol. 17(1), pages 15-33, July.
    23. Haixiao Huang & Gay Y. Miller & Bruce J. Sherrick & Miguel I. Gómez, 2006. "Factors Influencing Illinois Farmland Values," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(2), pages 458-470.
    24. Kenneth M. Lusht, 1996. "A Comparison of Prices Brought by English Auctions and Private Negotiations," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 24(4), pages 517-530, December.
    25. Alberto Abadie & Guido W. Imbens, 2006. "Large Sample Properties of Matching Estimators for Average Treatment Effects," Econometrica, Econometric Society, vol. 74(1), pages 235-267, January.
    26. Christopher J. Mayer, 1998. "Assessing the Performance of Real Estate Auctions," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 26(1), pages 41-66, March.
    27. Heckman, James J & Smith, Jeffrey A, 1999. "The Pre-programme Earnings Dip and the Determinants of Participation in a Social Programme. Implications for Simple Programme Evaluation Strategies," Economic Journal, Royal Economic Society, vol. 109(457), pages 313-348, July.
    28. Edwin Leuven & Barbara Sianesi, 2003. "PSMATCH2: Stata module to perform full Mahalanobis and propensity score matching, common support graphing, and covariate imbalance testing," Statistical Software Components S432001, Boston College Department of Economics, revised 01 Feb 2018.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ritter, Matthias & Hüttel, Silke & Odening, Martin & Seifert, Stefan, 2020. "Revisiting the relationship between land price and parcel size in agriculture," Land Use Policy, Elsevier, vol. 97(C).
    2. Marlene Kionka & Martin Odening & Jana Plogmann & Matthias Ritter, 2021. "Measuring liquidity in agricultural land markets," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 82(4), pages 690-713, September.
    3. Kvartiuk, Vasyl & Herzfeld, Thomas & Bukin, Eduard, 2022. "Decentralized public farmland conveyance: Rental rights auctioning in Ukraine," Land Use Policy, Elsevier, vol. 114(C).
    4. Roman Čibera & Tomáš Krabec, 2016. "Behavioral Finance and Asset Valuation in Insolvency Proceedings," Ekonomika a Management, Prague University of Economics and Business, vol. 2016(1).
    5. Ritter, Matthias & Huttel, Silke & Odening, Martin & Seifert, Stefan, 2019. "Revisiting The Relationship Between Land Price And Parcel Size," 2019 Conference (63rd), February 12-15, 2019, Melbourne, Australia 285062, Australian Agricultural and Resource Economics Society (AARES).
    6. Yifei Wu & Jeffrey H. Dorfman & Brady E. Brewer, 2021. "The susceptibility of farmland loans to default under falling farmland and commodity prices," Agricultural Economics, International Association of Agricultural Economists, vol. 52(4), pages 561-574, July.
    7. Deininger, Klaus W. & Ali, Daniel Ayalew & Neyter, Roman, 2023. "Impacts of a mandatory shift to decentralized online auctions on revenue from public land leases in Ukraine," Journal of Economic Behavior & Organization, Elsevier, vol. 213(C), pages 432-450.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marco Caliendo & Sabine Kopeinig, 2008. "Some Practical Guidance For The Implementation Of Propensity Score Matching," Journal of Economic Surveys, Wiley Blackwell, vol. 22(1), pages 31-72, February.
    2. Richard Blundell & Monica Costa Dias, 2009. "Alternative Approaches to Evaluation in Empirical Microeconomics," Journal of Human Resources, University of Wisconsin Press, vol. 44(3).
    3. Lechner, Michael & Wunsch, Conny, 2013. "Sensitivity of matching-based program evaluations to the availability of control variables," Labour Economics, Elsevier, vol. 21(C), pages 111-121.
    4. Huettel, Silke & Odening, Martin & Kataria, Karin & Balmann, Alfons, 2013. "Price Formation on Land Market Auctions in East Germany – An Empirical Analysis," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 62(02), pages 1-17, May.
    5. Huettel, Silke & Odening, Martin & Kataria, Karin & Balmann, Alfons, 2013. "Price Formation on Land Market Auctions in East Germany – An Empirical Analysis," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 62(2).
    6. Tommaso Nannicini, 2007. "Simulation-based sensitivity analysis for matching estimators," Stata Journal, StataCorp LLC, vol. 7(3), pages 334-350, September.
    7. James J. Heckman & Jeffrey A. Smith, 2004. "The Determinants of Participation in a Social Program: Evidence from a Prototypical Job Training Program," Journal of Labor Economics, University of Chicago Press, vol. 22(2), pages 243-298, April.
    8. Andreas C. Drichoutis & Rodolfo M. Nayga, Jr. & Panagiotis Lazaridis, 2009. "Can Nutritional Label Use Influence Body Weight Outcomes?," Kyklos, Wiley Blackwell, vol. 62(4), pages 500-525, November.
    9. Seonho Shin, 2022. "Evaluating the Effect of the Matching Grant Program for Refugees: An Observational Study Using Matching, Weighting, and the Mantel-Haenszel Test," Journal of Labor Research, Springer, vol. 43(1), pages 103-133, March.
    10. Chun-Chang Lee & Yi-Xin Chen & Yun-Ling Wu & Wen-Chih Yeh & Chih-Min Liang, 2020. "Multilevel Analysis of the Pressure of Agricultural Land Conversion, Degree of Urbanization and Agricultural Land Prices in Taiwan," Land, MDPI, vol. 9(12), pages 1-21, November.
    11. Joseph M. Gasper & Kathryn A. Henderson & David S. Berman, 2017. "Do Sectoral Employment Programs Work? New Evidence from New York City's Sector-Focused Career Centers," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 56(1), pages 40-72, January.
    12. Han, Lu & Strange, William C., 2015. "The Microstructure of Housing Markets," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 813-886, Elsevier.
    13. Urban, Dieter M & Weder di Mauro, Beatrice & Moser, Christoph, 2009. "Offshoring, Firm Performance and Establishment-Level Employment: Identifying Productivity and Downsizing Effects," CEPR Discussion Papers 7455, C.E.P.R. Discussion Papers.
    14. Emma Bruno & Rosalia Castellano & Gennaro Punzo & Luca Salvati, 2024. "Direct and spillover effects of short‐ and long‐term land pricing drivers: Evidence from Italian districts, 1992−2019," Journal of Regional Science, Wiley Blackwell, vol. 64(3), pages 804-839, June.
    15. Hüttel, S. & Wildermann, L., 2015. "Price formation in agricultural land markets – how do different acquiring parties and sellers matter?," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 50, March.
    16. Ritter, Matthias & Hüttel, Silke & Odening, Martin & Seifert, Stefan, 2020. "Revisiting the relationship between land price and parcel size in agriculture," Land Use Policy, Elsevier, vol. 97(C).
    17. Gabrielle Wills, 2016. "Principal leadership changes in South Africa: Investigating their consequences for school performance," Working Papers 01/2016, Stellenbosch University, Department of Economics.
    18. Burt S. Barnow & Jeffrey Smith, 2015. "Employment and Training Programs," NBER Chapters, in: Economics of Means-Tested Transfer Programs in the United States, Volume 2, pages 127-234, National Bureau of Economic Research, Inc.
    19. Yuen Leng Chow & Isa E. Hafalir & Abdullah Yavas, 2015. "Auction versus Negotiated Sale: Evidence from Real Estate Sales," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 43(2), pages 432-470, June.
    20. Ramírez-Álvarez, Aurora Alejandra, 2019. "Land titling and its effect on the allocation of public goods: Evidence from Mexico," World Development, Elsevier, vol. 124(C), pages 1-1.

    More about this item

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:uwp:landec:v:90:y:2014:iii:1:p:395-410. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://le.uwpress.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.