Agricultural Economics Department
Date of this Version
2010
Abstract
The market for agricultural real estate has historically been what observers call a “thin market,” in that very little is marketed and changes ownership at any given point in time. In fact, even when there is spirited buying interest and willingness to bid aggressively, the supply side of the market for agricultural land tends to be inelastic - in that the percentage change in quantity put on the market is much less that the percentage increase in bid prices.
Of course, this partially explains upward value trends to agricultural real estate over time. If potential buyers realize there is only a limited offering on the market at any given point in time, or that a particular land tract of interest may not be for sale for decades, then they will tend to bid more aggressively when the opportunity arises. Even when the income-earnings potential of agricultural real estate may be less than desirable at the time, buyers may still be willing to compete hard for an agricultural property, knowing that the window-of-opportunity to buy it is limited.
Comments
Published by the Department of Agricultural Economics, University of Nebraska-Lincoln. Copyright 2010 Regents of the University of Nebraska.