Influences on farmland values in urban Texas counties and the State

Abstract

Farmland values have been a highly researched topic for the past several decades. Interest was spurred initially by increased variability between land values and farm income during the 1950's. Prior research sought to explain value changes through the defining the relationships between land values and an assortment of farm sector and nonfarm sector variables. The foci of the prior studies were mostly rural, homogeneous areas of major agricultural states. Although Texas is considered an important agricultural state with a diversity of related enterprises, its farmland values have generally escaped the scrutiny of review. In 1992, Texas farmland comprised nearly 10 percent of the U.S. aggregated farmland value. This study sought to further knowledge by evaluating previously identified significant land value influences for their importance in Texas. Based on a literature review, proxy variables were specified to represent the influences and were tested for their explanatory ability on Texas land value data. The scope of the study was selected to reflect years that were considered historically interesting for land values in the United States, 1969 through 1994. Urban counties were studied to ascertain if identified influences were important to designated agricultural-use land near metropolitan areas. The results indicate that land supply and demand factors were the most often important influences upon land values, General agricultural economic factors were next in prevalence, followed by farm and nonfarm income factors which were not usually significant to the urban farmland. The study also emphasized that land dedicated to agricultural use in the urban counties was chiefly valued for its abilities to serve investment and consumptive purposes, instead of productive participants need to ascertain local market conditions before making a decision to buy or sell land. Land owners must carefully consider land management choices, as resource issues will increasingly impact land value. Agricultural land owners should evaluate their land primarily in terms of its investment and consumptive potential, instead of its productive qualities.