Trends in Minnesota's Forestland Real Estate Market: Potential Implications for Forestland Uses

Author： Kilgore Michael A. MacKay Donald G.

Publisher： Society of American Foresters

ISSN： 0742-6348

Source： Northern Journal of Applied Forestry, Vol.24, Iss.1, 2007-03, pp. : 37-42

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Abstract

Data on nearly 8,000 sales of Minnesota forestland 20 ac or larger from 1989 through 2003 were analyzed to identify important real estate market trends and the implication of these trends on forestland uses. Over this 15-year period, the median sale price of forestland increased, on average, 13% per year in nominal terms, with per-acre prices inversely correlated with parcel size. From 1989 to 2003, 57% of all forestland sales were less than 40 ac, with just 3% exceeding 200 ac. The sales data documented an 18% decrease in the average size of forestland tracts since 1989, suggesting that forestland parcelization may be occurring. From 1989 to 2003, individuals accounted for 94% of all acreage purchased and 89% of all acreage sold, indicating a slight, but gradual, shift in forestland ownership out of incorporated interests to individuals. Although the land's annual income-generating ability compared with its market price fluctuated considerably from 1989 to 2003, Minnesota's forestland capitalization rate was slightly higher in 2003 than in 1989, suggesting that the economic competitiveness of timber management as a land use increased over this period of considerable forestland price appreciation. With the exception of parcelization, these changes will likely have only a modest effect on forestland uses.