RLI-NAR Land Business Survey: September 2015

8/20/2019 RLI-NAR Land Business Survey: September 2015

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REALTORS® Land Institute

October 2015 Land Business Survey

Lawrence Yun, Senior Vice President & Chief EconomistDanielle Hale, Managing Director, Housing Research

Gay Cororaton, Research Economist

January 2016

Conducted by the Research Division of the National Association of REALTORS®


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About the REALTORS® Land Institute

October 2015 Land Business Survey

• Objective: gather information about the land business for thereference period October 2014 –September 2015 and the outlookfor October 2015 –September 2016.

• Market trends are based on the last sale of the respondent thatoccurred during the reference period.

•

REALTORS® Land Institute sent the online survey to itsapproximately 1,200 members plus approximately 21,800 non-members from October 21 –November 26, 2015.

• There were 614 respondents, approximately the same as in theJuly 2014 survey (629 responses) and the February 2015 survey(619 responses). To correct for under- and over-response acrossregions and countries, NAR weighted the sample responses by aweight factor based on a comparison of the regional distributionof responses against the data provided by REALTORS® LandInstitute (see Technical Appendix, last page).


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Membership Among Respondents

63%

80%

13%

35%

52%

76%

10%

31%

61%70%

8%

21%

REALTORS® Land

Institute

NAR CCIM Other

Professional Membership of Respondents

(Percent of respondents*)

Jul 2014 Survey Feb 2015 Survey Oct 2015 Survey

*Multiple responses allowed so percent shares will not sum up to 100 percent during survey

period.


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Highlights of the October 2014 Land Business Survey

• Prices of land sold in the U.S. – Up by three percent in the reference period October 2014-September

2015 compared to their year-ago levels.

– Commercial land prices rose the fastest at five percent.

– Residential land prices were up by three percent.

– Agricultural land prices were up by one percent.

• Prices of land sold outside the U.S. (mainly, Canada)

– Up by two percent in the reference period October 2014 –September

2015 compared to their year-ago levels.

– Residential land prices rose strongly at eight percent.

– Commercial land prices were up by five percent.

– Agricultural land prices were up by two percent.


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• Dollar volume of land sold in the U.S – Up by three percent in the reference period October 2014-September

2015 compared to year-ago levels.

– Residential land sales volume was up by four percent.

– Commercial land sales volume rose three percent.

– Agricultural land sales volume rose two percent.

• Dollar volume of land sold outside the U.S. (mainly, Canada)

– Up by four percent in the reference period October 2014 –September

2015 compared to year-ago levels.

– Residential sales volume increased eleven percent.

– Commercial sales volume rose seven percent.

– Agriculture sales volume was up three percent.


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• Price Outlook of U.S. Land Sales by September 2016

compared to September 2015

– Modest growth of two percent across all land types.

– Stronger price growth in brownfield development of six percent.

– Residential land prices expected to increase by four percent.

• Dollar Volume Outlook for U.S. Land Sales

– 53 percent of respondents expect dollar volume to remain “about the

same,” 31 percent expect “stronger” growth, and 15 percent expect

“weaker” growth.


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• Major practice areas in the U.S. among respondents:Agricultural (64 percent), Residential (56 percent), and

Recreation (50 percent).

• Major practice areas outside the U.S. among respondents:

Residential (76 percent) and Commercial (62 percent).• Regions 1 and 5 accounted for nearly 50 percent of most

recent land sales

• Individuals are major buyers in the U.S. among

respondents:(60 percent), followed by investors (20 percent).• Median days on market for U.S. land sales: 100 days;

residential land also typically sold within 100 days.


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• Irrigated sales accounted for 16 percent of U.S. land sales;nearly half of irrigated sales were in Region 5.

• Mineral rights conveyed in 61 percent of U.S. land sales across

the regions.

• In several regions, cash purchases were common; on average,buyers financed 35 percent of the value of the property (or

made a 65 percent downpayment). Among land sales in the

U.S., irrigated agriculture land, development, and other non-

residential land were typically financed.


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Market Conditions and Outlook


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Price of Land Sold in the U.S. Increased Across

All Types

1%

5%

2%

3%

3%3% 3%

2%

3%3%

Median Percent Change in the Price of Land Sold in the U.S. ($/acre) inSeptember 2015 from Levels One Year Ago


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Prices of Land Sold Outside the U.S.* Rose Strongly

2%

5%

8%

-1%

2%

Agriculture Commercial Residential All other types All

Median Percent Change in the Price of Land Sold Outside the U.S.* ($/acre)

in September 2015 from Levels One Year Ago

* Includes Canada, Latin America/Caribbean, and Other International.

D ll V l f U S L d S l I d


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Dollar Volume of U.S. Land Sales Increased

Across All Types

2%

3%

1%

2% 2% 2%

4%

3% 3% 3%

Median Percent Change in the Dollar Volume of Land Sold in the U.S. fromOctober 2014-September 2015 Compared to the Previous 12 Months

ll l f id i l d i l d


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Dollar Volume of Residential and Commercial Land

Sales Outside the U.S.* Rose Strongly

3%

7%

11%

0%

4%

Agriculture Commercial Residential All other types All

Median Percent Change in the Dollar Volume of Land Sold Outside theU.S.* from October 2014-September 2015 Compared to the Previous 12

Months

*Includes Canada, Latin America/Caribbean, and Other International.

i O l k f S d S l S b 20 6


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Price Outlook for U.S. Land Sales By September 2016

Compared to September 2015

1%

3%

6%

3%2%

3%

4%

2%2%

2%

Median Expected Change in Price of Land ($/acre) By September 2016Compared to Prices in September 2015

D ll V l f U S L d S l i G ll


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Dollar Volume for U.S. Land Sales is Generally

Expected to be the Same or Stronger

20%10%

21% 15% 16% 16% 9%19% 16% 15%

58%

53%

61%

66% 56% 48%44%

50%

75%

53%

22%37%

18% 19% 28%35%

48%30%

9%

31%

0%10%20%30%40%

50%60%70%80%90%

100%

Outlook for Sales Dollar Volume in September 2016 vs. September 2015

Weaker About the Same Stronger


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Characteristics of Land Sales*

* Based on respondents’ most recent land sales in October 2014-September

2015.


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Agricultural, Residential, and Recreation: Major

Areas of Land Practice in the U.S.

64%

28%

3%

11%

31%

50%56%

31%

6%

Land Practice in the U.S.

(Percent of respondents*)

*Multiple responses allowed, so percent shares will not sum to 100 percent.


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Residential and Commercial: Major Areas of Land

Practice Outside the U.S.*

28%

62%

7%11% 11% 10%

76%

5%10%

Land Practice Outside the U.S.*

(Percent of respondents**)


** Multiple responses allowed, so percent shares will not sum up to 100 percent.


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i d d f f h d


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Regions 1, 3, and 5 Accounted for Most of the Land

Practice in the U.S.

33%

13%

20%

11%

18%

5%

Main Region of Practice in the U.S.

Regions 1 3 and 5 Accounted for Most of


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Regions 1, 3, and 5 Accounted for Most of

Respondent’s Recent Land Sold in the U.S.

29%

14%

17%16%

20%

3%

Location of Most Recent Land Sold from October 2014-September 2015(Percent distribution)


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Residential, Agriculture, and Recreation Lands

Accounted for Most of the Land Sold in the U.S.

7%

18%

7%

0%1%

8%

21%

29%

7%

2%

Type of Most Recent Land Sold in the U.S.

from October 2014-September 2015


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Residential Land Accounted for Most of the Land

Sold Outside the U.S.*

1%

10%

18%

1% 4%8%

1%

56%

0%

Type of Most Recent Land Sold Outside the U.S.*

from October 2014-September 2015



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Types of Land Sold, By Region*

0%10%20%30%40%50%60%70%80%90%

100%

Type of Most Recent Land Sold from October 2014 –September 2015,

By Region*

(Percent distribution by region)

Agriculture Commercial/Development Ranch Recreation Residential Timber Other

*In this slide, Other International includes Latin America/Caribbean.


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Land Sold in the U.S. Was Typically of Lower Price

Compared to Canada

$6,750 $8,200$3,500 $3,000

$6,560

$12,750

$50,000

$6,000

Region 1 Region 2 Region 3 Region 4 Region 5 Region 6 Canada All

Median Price of Most Recent Land Sold from October 2014-September

2015, By Region

*Latin America/Caribbean and Other International are included in All but are not broken out separately.


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Median Price of Most Recent Land Sold in the U.S.

$9,860 $6,250

$92,857

$2,350 $2,545

$13,500

$1,999 $5,000

Median Price of Most Recent Land Sold in the U.S.* from October 2014-September 2015

*Development and Other Land are included in All but are not broken out separately.


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Land Sold More Quickly in Regions 2 and 6

100

62

120

90

160

78

10590


Median Days on Market of Most Recent Land Sold from

October 2014-September 2015, By Region*



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Agricultural Lands Sold Most Quickly in the U.S.

4560

180

126 120

100

180

100

Median Days on Market of Most Recent Land Sold in the U.S. from October2014-September 2015, By Type of Land*



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Lands Sold in Region 2, 3, and 4 Were Typically Larger

42

80

91

80

35

20

12

35


Median Acres Based on Most Recent Land Sold

from October 2014-September 2015, By Region*

*Latin America/Caribbean and Other International are included in All but are not broken out separately..


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Agriculture, Ranch, and Timber Typically Had the Largest

Acreage of Lands Sold in the U.S.

187

120

14

160

100

8

141

65

Median Acres Based on Most Recent Land Sold

From October 2014-September 2015 in the U.S., By Type of Land*


Approximately 16 Percent of U S Land Sales Were


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Approximately 16 Percent of U.S. Land Sales Were

Irrigated Land

86% 87% 84%

14% 13% 16%


Irrigated Land Sales in the U.S. Based on the Most Recent Sales

From October 2014-September 2015

No/Not Applicable Yes

Nearly Half of Irrigated Land Sales in the U S Were


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Nearly Half of Irrigated Land Sales in the U.S. Were

in Region 5

2%

6%

17%

5%

10%

4%

22%

16%

6%

17%20%

15%

47%

38%

48%

7%10% 11%


Distribution of Irrigated Land Sales in the U.S., Based on Most RecentTransactions from October 2014-September 2015

Region 1 Region 2 Region 3 Region 4 Region 5 Region 6

l h d f d l


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Mineral Rights Conveyed in 61 Percent of Land Sales

in the U.S.

60% 64% 61%

40% 36% 39%

July 2014 Survey Feb 2015 Survey Oct 2015 Survey

Mineral Rights Conveyed in Land Sales in the U.S. Based on Most Recent

Transactions from October 2014-September 2015

Yes No/Not Applicable

i l i h d i d l h


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Mineral Rights Conveyed in Land Sales Across the

U.S., But Less So in Region 6

10%11%

25%

17%

22%

18%

32%

26%

22%24%

27%

19%

13%11%

14%

5%3% 2%

July 2014 Survey Feb 2015 Survey Oct 2015 Survey

Distribution of Land Sales Where Mineral Rights Conveyed Based on Most

Recent Transactions from October 2014-September 2015

Region 1 Region 2 Region 3 Region 4 Region 5 Region 6

I di id l /F ili th M j B f


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Individuals/Families were the Major Buyers of

Recent Land Transactions In and Outside the U.S.

58%

17% 10% 17%

1%6%

61%

15% 9%

23%

3% 5%

55%

17%7%

28%

4% 1%

Type of Buyer in Most Recent Land Sale Transaction*(As percent of respondents who had a sale)


*Will not sum to 100% because respondent can choose more than one type.

Individual/Families Were the Major Buyers of Land


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Individual/Families Were the Major Buyers of Land

in the U.S.

60%

16%10%

20%

1% 2%

Type of U.S. Buyer for the Most Recent Land Sales*

*Will not sum to 100% because respondent can choose more than one type.

I di id l /F il B i th U S R id ti l


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Individuals/Family Buyers in the U.S.: Residential

and Recreation Land Were Major Preferences

5%

13%

3%1% 0%

9%

30%32%

5%

2%

Type of Land Bought in the U.S. by Individual Buyers

C t B i th U S C i l L d W


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Corporate Buyers in the U.S.: Commercial Land Was

the Top Preference

8%

21%

24%

0%1%

6%

3%

21%

13%

4%

Type of Land Bought in the U.S. by Corporate Buyers

Expansion Farmers in the U S : Irrigated Agriculture


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Expansion Farmers in the U.S.: Irrigated Agriculture

Land Was Major Preference

21%

56%

0%3%

0%5% 6%

8%

2%0%

Type of Land Bought in the U.S. by Expansion Farmer Buyers

I B i h U S R id i l L d h


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Investor Buyers in the U.S.: Residential Land was the

Top Preference

6%

18%

12%

0%

3%2%

20%

23%

13%

3%

Type of Land Bought by Investor Buyers

Foreign Buyers Purchasing in the U S : Residential


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Foreign Buyers Purchasing in the U.S.: Residential

Land Was Major Preference

9%

18% 18%

36%

18%

Agriculture, irrigated Agriculture, non-

irrigated

Development,

greenfield

Residential Other

Type of Land Bought by Foreign Buyers

In Several Regions, Cash Purchases are Common; On


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In Several Regions, Cash Purchases are Common; On

Average Buyers Financed 35 Percent of the Value of

the Property (65 Percent Downpayment)

0%

20%

0%

40%

0%

30%

0%

20%

29%

35%

25%

39%

22%

36%

52%

35%


Percent of the Value of the Most Recent Land Purchase That was

Financed, By Region*

Median Percent Financing Average Percent Financing


I di id l/F ili W Al h M j S ll f


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Individual/Families Were Also the Major Sellers of

Land in the U.S.

45%

7%2%

7%

0%3%

Type of Seller in the Most Recent Land Sale in the U.S.*

(As percent of respondents who had a sale)

* Will not sum to 100 percent because respondent can choose more than one type.


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Conclusions

•

There was strong price and sales growth in commercial andresidential land sales in both U.S. and non-U.S. markets in

October 2014-September 2015 compared to the previous 12-

month period.

• Respondents generally expect conditions to “stay the same”

through September 2016.

• Agriculture, residential, and recreation land were primary

types of land sold in the U.S.; meanwhile, residential and

commercial land were major types of land sold outside the

United States.


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Technical Appendix

• The REALTORS® Land Institute sent the October 2015 survey to 1,218 REALTORS® Land

Institute members and 21,838 non-members, a total of 23,056. There were 614respondents, a response rate of 2.7 percent. Regions 3 and 4 were the top regions of practice

among the respondents.


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Technical Appendix

• The graph below shows the distribution across the U.S. regions and countries of the target

participants to the distribution of respondents. The chart shows an under-response in Region1, Canada, Latin America/Caribbean, and Other International and an over-response in

Regions 2, 3, 4, 5, and 6. For example, 17 percent of the 23,056 target participants were from

Region 1, but only 8 percent responded to the survey, indicating an under-response.


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Technical Appendix

• To align the distribution across regions of the sample to the distribution across regions of the

target population, each respondent was given a weight factor based on the respondent’sregion of primary business which the respondent self-identified in the survey. The weight is

calculated as:

Weight of region i = percent share of region i based on the target distribution

percent share of region i based on the sample distribution

• In cases of “under-response” as in Region 1, the weight will be greater than 1, and in cases of

“over-response” as in Region 2, the weight will be less than 1. For example, the weight forRegion 1 is 2.03 (17 percent divided by 8 percent), and the weight for Region 2 is 0.44 ( 7

percent divided by 16 percent).

• Each response is then multiplied by the appropriate weight factor based on the respondent’s

indicated region of primary business.

Weight Factors Used in the October 2015 Survey

Region 1 2.04

Region 2 0.44

Region 3 0.52

Region 4 0.26

Region 5 0.63

Region 6 0.43

Canada 2.04

Latin America/Carribean 6.82

Other international 12.54


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The REALTORS® Land Institute is a membership organization created for and by land experts, dedicated to

building knowledge, building relationships, and building business for its members--the extraordinary real estateprofessionals--who broker, lease, sell, develop, and manage our most precious resource: the land.

The NATIONAL ASSOCIATION of REALTORS®, “The Voice for Real Estate,” is America’s largest trade association,

representing over 1 million members, including NAR’s institutes, societies, and councils, involved in all aspects

of the real estate industry.

The NATIONAL ASSOCIATION of REALTORS® Research Division collects and disseminates timely, accurate, and

comprehensive real estate data and to conduct economic analysis in order to inform and engage members,consumers, policy makers, and the media in a professional and accessible manner.

REALTORS® Land Institute

430 N. Michigan AvenueChicago, IL 60611

United States

Phone: 800-441-5263

NATIONAL ASSOCIATION of REALTORS®

Research Division500 New Jersey Avenue, NW

Washington, DC 20001

Phone: 202-383-1000

RLI-NAR Land Business Survey: September 2015

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Transcript of RLI-NAR Land Business Survey: September 2015