Determinants of Rural Property Values in Georgia

Recent patterns of rural land use in Georgia have forest land market. Simultaneous equations will stressed urban aggrandizement and the emphasize the structural interdependence of these transformation of a significant portion of the two markets. Cross-sectional data from 47 Georgia available rural land into forests. The area covered by counties will be used to estimate the structural commercial forests in Georgia has increased 21 parameters of the model. Those factors that are percent over the past quarter century to the point related to inter-county differences in farm and forest where two out of every three acres in Georgia are land values will be identified in a general equilibrium presently growing tree crops [1] . During the 1958-68 framework. decade the proportion of land in farms in Georgia fell from 31.3 percent to 27.0 percent, representing a RELEVANTTHEORY withdrawal of approximately 1.6 million acres from As with any other input, the price of rural land is farm use.l As a partial consequence of this shift in determined by the interaction of the supply of and rural land use patterns, the price of farm land over demand for land in each market; and the attainment the past ten years has increased more rapidly in of an equilibrium among the various markets for rural Georgia than in any other state but one.2 land. Therefore, a completely specified economic Recent structural changes in rural land markets model of the rural land market is needed in order to make it imperative that tax assessors and policy accurately depict the structure of the complete makers have a clear understanding of the factors that market. Theory that is relevant to the rural land determine rural land prices. Farm land tax assessment market is presented in the following sections. techniques should not ignore any factors found to be D important in the determination of farm land prices. At the policy level it is important that the The demand for rural land as a productive interrelationships between the various component resource is equal to the present value of net revenue markets of the rural land market be explicit. Full streams over the planning horizon. Regional knowledge of these structural interrelationships will differences in farm land quality, market proximity, encourage the formulation of equitable and effective climate, etc., cause differences in the net revenue that policies that affect rural land use. is expected from that land. Ceteris paribus, rural land The objective of this study is to specify the values in areas with highly productive land capable of structure of an econometric model of the rural land generating high net returns are expected to be market in Georgia. Because of the importance of relatively high. Therefore, a positive correlation is forests in Georgia, the rural land market will be hypothesized between the net revenue generated by disaggregated into the farm land market and the production on forest or farm land and the price of