The "unusual" behavior of agricultural land prices is the subject of considerable debate and controversy and is the object of this research. There is little doubt that land prices have been increasing steadily since 1959 and dramatically throughout the decade of the 1970's. However, there is widespread disagreement among economists, appraisers, and other interested parties as to the causes of the dramatic increases in land prices. Net agricultural income is undoubtedly an important factor in the agricultural land market. Yet, land prices have continued to increase in the face of steady and even declining net incomes. Other factors often considered as exerting considerable influences are inflation, pressures from an increasing population, incentives to attain economies of size through ranch enlargement, and capitalization of government farm program "payments" into land values. The objective of this research is to identify the factors that exert significant influence on agricultural grazing land sale prices in two Eastern Oregon counties and to assess the impact of changes in these factors on the selling price of grazing land. A single equation linear regression model is used to identify the factors that have a significant impact on the price of grazing land. The variables determined to be positively correlated to the price of grazing land are the productivity of the land, the price of feeder cattle, inflation, and the assessed value of real property included in the land sales. The price of hay is negatively correlated with the price of grazing land. The inclusion of public land (USFS and BLM) grazing privileges in the sale was found to have no significant effect on the price of grazing land. In addition, purchases for the purpose of ranch enlargement are occurring at lower prices than purchases for ranch establishment. The major limitations of this study are the restrictions placed on the sales that are analyzed and the problem of standardizing a measure of land productivity. The first limitation is defensible given the stated objectives of the study and the need to limit the analysis to a roughly homogeneous class of land sales. The latter limitation prohibits generalization of the results to other areas without appropriate standardization of the measure of land productivity. / Graduation date: 1979

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