©2011 Cengage Learning

Chapter 11 ©2011 Cengage Learning RURAL AND RECREATIONAL REAL ESTATE MARKETS

Farmland Markets Orchards Irrigated croplands Dry croplands Irrigated pasture Dry pasture Rangelands ©2011 Cengage Learning Agriculture is a major land use & includes

Farmland Markets Grains & Oilseeds Cattle Poultry & Eggs Milk Fruits & Nuts ©2011 Cengage Learning Major Crop Categories

Farmland use is determined by which crops will grow, at what cost, and the estimated yields of each. Soil Productivity Rainfall Growing Season Water Supplies Topography Shape, Size and Layout Improvements Access Markets Community Facilities Permits and Quotas Competition from Other Uses Urban Influences Crop Prices Financing Environmentalism Labor Relations ©2011 Cengage Learning Key factors:

©2011 Cengage Learning Figure 11.2 Soil Class, Slope, and Erosion A Map of the Soil and its Capability

Over the past century there has been a huge increase in agriculture output per farmer A sharp rise in average farm size, mechanization, & invested capital per farm. Family farms have decreased and corporate farms play a bigger role. ©2011 Cengage Learning

Rural Homes Increased number of people turning to the rural land market. The demand for rural land for retirement, life-style, & recreation. Tied to the expansion of discretionary income and available leisure time. ©2011 Cengage Learning

Rural Subdivisions – Second Home Markets Several categories: Recreation including ski resorts Coastal Beaches Remote Areas ©2011 Cengage Learning

Key Factors of Newer Rural Subdivisions Orientation to recreational attractions Limited market Speculation is another factor Financial risk is high Many subdivisions created with marginal services & infrastructure. ©2011 Cengage Learning

Key Factors of Rural Subdivisions Existing Infrastructure Speculation Shifts in demand ©2011 Cengage Learning

Rural Homes: Older vs. Newer Sold on a local market Local influences determine prices Water well and septic systems must be considered Boundaries of the properties are problematic Quality and adequacy of improvements Different buyer profile ©2011 Cengage Learning Older rural homes have entirely different market factors from newer recreational subdivisions & include :

Key factors in Timber and other Resource Lands Not connected to the local economy or real estate market. The demand and supply of the resource markets dominates. Transportation is a major cost consideration. Critical characteristic of the resource parcel include the size of the ore body or timber stand. Environmental and pollution controls may vary. Generally treated as a special category by governmental agencies, often in a favorable or preferential way. Income tax treatment includes: depletion allowances for underground resources capital gains treatment for timber sales ©2011 Cengage Learning

Trends in Resource Land Markets Gradual depletion of the richer resource concentrations makes the more expensive and less desirable locations more desirable. Increase in prices for materials make marginal areas profitable. Trend for increase in resource prices. Exploration and resource development will be more complex and expensive. Large corporations will dominate. Environmental and pollution control costs are increasing. ©2011 Cengage Learning

The rural home market is two markets—new recreational subdivisions & older rural homes. Each market attracts a different type of purchaser, and each has its own advantages & liabilities. Recent trends in technology and the continued depletion of resource stocks have made the exploration and further exploitation of old resource areas attractive. ©2011 Cengage Learning