Determinants of forest land prices in Northern Minnesota: a hedonic pricing approach

A hedonic price model was developed to analyze the market for undeveloped forestland in northern Minnesota. The data included 387 forestland parcels purchased in 2001 or 2002. Information describing parcel physical characteristics, amenity features, merchantable timber volume, development trends, terms of financing, and several proximity, distance, and adjacency conditions were tested for their influence on forestland prices. The model's independent variables collectively explained approximately 50% of the variation in per hectare sale price. The method by which forestland sales were financed, road access and density, proximity to population centers, and presence of lake or river frontage had the largest positive influences on per hectare sale prices. Adjacency to public land had an unexpectedly large, negative influence on sale price. Importantly, a parcel's merchantable timber volume was not found to be a significant predictor of forestland sale price. In general, forestland markets were driven by three major influences: land development pressures, presence of or close proximity to a water body, and the use of contract for deed financing.