Factors Affecting Land Prices in a Rural New Jersey County

Author:

Northcraft Carl A.,Small Leslie E.

Abstract

Much attention has been given in recent years to the conversion of substantial amounts of rural land to urban uses. A variety of policies designed to encourage the retention of rural open space have been either proposed or implemented by many state and local governments. Because the decision to convert land to urban uses is generally a private decision in response to market forces, an understanding of these market forces should facilitate better policy development and implementation. This paper reports on a research project designed to explore the forces affecting rural land prices in areas where the rural land market is significantly influenced by the demand for land for urban or suburban uses. Publicly available data on transfers of rural land were analyzed, using a multiple regression model, to both identify and quantify the importance of factors affecting rural land prices.

Publisher

Cambridge University Press (CUP)

Reference12 articles.

1. New Jersey Division of Taxation. “Farmland Assessment Act of 1964: Tenth Report of Data from FA-1 Forms for 1978 Tax Year.” September 1978.

2. This process appeared reasonable, given the relatively low correlation coefficients among the independent variables. As each variable was dropped, the results were scrutinized to attempt to detect multicollinearity problems. Some multicollinearity may exist between parcel size and the variables representing corporate purchaser, percent cropland, distance to population center, and distance to commercial parcel. For a fuller discussion, see Northcraft.

3. Some of these transfers were probably not legitimate market transfers, but rather involved changes in title with no change in the effective control of the land. Others were legitimate market transfers, but for which the total consideration involved aspects other than the purchase price. While it would be desireable to include these transactions in the analysis (using the full consideration as the transfer price), it is not feasible to obtain accurate information on the full consideration. The exclusion of these transfers may bias the results of the analysis, but the nature and direction of that bias are unknown.

4. New Jersey Department of Labor and Industry. Division of Planning and Research. New Jersey Residential Buildings Permits: Annual Summary, various years.

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