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Forced Sales and Farmland Prices

Author

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  • Odening, Martin
  • Jetzinger, Simon
  • Huettel, Silke

Abstract

In this paper we analyse agricultural land prices in the state Brandenburg. Our objective is to understand the price formation in foreclosures. Knowledge of the impact of foreclosures is desirable for the determination of mortgage lending values. The effect of foreclosures can be decomposed into two parts. First, the effect of a pressured sale, which will likely reduce the realized price compared with an unpressured sale and second, the effect of an auction, which may lead to a price premium. The empirical analysis is based on a rich data set of land prices in Brandenburg between 2000 and 2011 provided by the “Oberer Gutachterausschuss für Grundstückswerte”. The treatment effect of forced sales is derived by means of a statistical matching approach. Our results show that on average prices premia rather than price discounts are realized in forced sales of agricultural land. The price differential between forced and nonforced sales, however, is not constant but depends on the land market conditions.
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Suggested Citation

  • Odening, Martin & Jetzinger, Simon & Huettel, Silke, 2013. "Forced Sales and Farmland Prices," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150274, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea13:150274
    DOI: 10.22004/ag.econ.150274
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    2. 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).
    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. 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.
    5. 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.
    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. 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).
    8. 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).

    More about this item

    Keywords

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    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

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