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Following the Market? Hedonic Farmland Valuation Using Sales Prices versus Self-reported Values

Author

Listed:
  • Daniel P. Bigelow
  • Jennifer Ifft
  • Todd Kuethe

Abstract

Many farmland valuation studies rely on survey estimates to form the dependent variable in a first-stage hedonic model. This study, based in New York State, provides a microscale comparison of transaction prices and producers’ market value estimates from the U.S. Department of Agriculture’s June Area Survey. Although we find similar weighted value distributions, regression results identify differences in marginal effect estimates and illustrate how market thinness plays a role in the comparability of observed transaction prices and self-reported values. The findings have implications for future hedonic studies, including insights into behavioral differences concerning how farmers and market participants perceive the value of farmland.

Suggested Citation

  • Daniel P. Bigelow & Jennifer Ifft & Todd Kuethe, 2020. "Following the Market? Hedonic Farmland Valuation Using Sales Prices versus Self-reported Values," Land Economics, University of Wisconsin Press, vol. 96(3), pages 418-440.
    • Handle: RePEc:uwp:landec:v:96:y:2020:1:3:p:418-440
    Note: DOI: 10.3368/le.96.3.418
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    Citations

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    Cited by:

    1. Seifert, Stefan & Hüttel, Silke & Werwatz, Axel, 2023. "Organic cultivation and farmland prices: Does certification matter?," FORLand Working Papers 28 (2023), Humboldt University Berlin, DFG Research Unit 2569 FORLand "Agricultural Land Markets – Efficiency and Regulation".
    2. Bareille, François & Chakir, Raja, 2023. "The impact of climate change on agriculture: A repeat-Ricardian analysis," Journal of Environmental Economics and Management, Elsevier, vol. 119(C).
    3. Plastina, Alejandro & Zhang, Wendong & Sawadgo, Wendiam, 2024. "By How Much Can Appraised Farm Values Differ Across Appraisers?," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2024, January.
    4. Stefan Seifert & Silke Hüttel, 2023. "Is there a risk of a winner’s curse in farmland auctions?," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 50(3), pages 1140-1177.
    5. repec:ags:aaea22:335557 is not listed on IDEAS
    6. 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.
    7. Burton, Kati & Maas, Alexander & Lee, Katherine, 2022. "A Case Study in Contamination: Persistent Home Value Losses Associated with the Elk River Spill," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 47(3), September.
    8. Lars Isenhardt & Stefan Seifert & Silke Hüttel, 2023. "Tenant Favoritism and Right of First Refusals in Farmland Auctions: Competition and Price Effects," Land Economics, University of Wisconsin Press, vol. 99(2), pages 302-324.
    9. Gardner, Grant & Sampson, Gabriel S., 2022. "Land Value Impacts of Ethanol Market Expansion by Irrigation Status," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 47(3), September.
    10. Jens Kolbe & Rainer Schulz & Martin Wersing & Axel Werwatz, 2021. "Real estate listings and their usefulness for hedonic regressions," Empirical Economics, Springer, vol. 61(6), pages 3239-3269, December.
    11. Melkani, Aakanksha & Mieno, Taro & Hrozencik, Robert A. & Rimsaite, Renata & Brozovic, Nick, 2024. "The Impact of Drought on Farmland Values through a Hedonic Price Analysis of Farmland Transactions in Contiguous US," 2024 Annual Meeting, July 28-30, New Orleans, LA 344018, Agricultural and Applied Economics Association.
    12. Luise Meissner & Lisa Kappenberg & Oliver Musshoff, 2022. "An Analytical Framework for Evaluating Farmland Market Regulation: Examining the German Land Transaction Law," Land, MDPI, vol. 11(10), pages 1-12, October.
    13. Maximilian Humpesch & Stefan Seifert & Alfons Balmann & Silke Hüttel, 2022. "How does tenancy affect farmland prices? Effects of lease status, lease term and buyer type," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 83(2), pages 242-263, September.
    14. Sen Chakraborty, Kritika & Chakraborty, Avinandan & Berrens, Robert P., 2023. "Valuing soil erosion control investments in Nigerian agricultural lands: A hedonic pricing model," World Development, Elsevier, vol. 170(C).
    15. Plogmann, Jana & Mußhoff, Oliver & Odening, Martin & Ritter, Matthias, 2022. "Farmland sales under returns and price uncertainty," Economic Modelling, Elsevier, vol. 117(C).
    16. Kionka, Marlene & Kuethe, Todd H. & Musshoff, Oliver & Odening, Martin & Ritter, Matthias, 2022. "Bargaining Power in the Agricultural Land Rental Market," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322186, Agricultural and Applied Economics Association.
    17. Graubner, Marten & Hüttel, Silke, 2024. "Rental and sale prices of agricultural lands under spatial competition," FORLand Working Papers 29 (2024), Humboldt University Berlin, DFG Research Unit 2569 FORLand "Agricultural Land Markets – Efficiency and Regulation".
    18. Stefan Seifert & Christoph Kahle & Silke Hüttel, 2021. "Price Dispersion in Farmland Markets: What Is the Role of Asymmetric Information?," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(4), pages 1545-1568, August.
    19. Burnett, J. Wesley & Lacombe, Donald J. & Wallander, Steven, . "Spatial and Temporal Spillovers in US Cropland Values," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 49(1).
    20. Anita M. Chaudhry & Dean H. K. Fairbanks & Christoph Nolte, 2024. "Water Market Participation and Agricultural Land Values," Land Economics, University of Wisconsin Press, vol. 100(1), pages 127-147.
    21. Sampson, Gabriel & Gardner, Grant, 2021. "Land Value Impacts of Ethanol Market Expansion Differ by Irrigation Status," 2021 Annual Meeting, August 1-3, Austin, Texas 313854, Agricultural and Applied Economics Association.

    More about this item

    JEL classification:

    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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