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REALTORS® Land Institute

October 2015 Land Business Survey

Lawrence Yun, Senior Vice President & Chief Economist

Danielle Hale, Managing Director, Housing Research

Gay Cororaton, Research Economist

January 2016

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

About the REALTORS® Land Institute October 2015 Land Business Survey

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

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

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

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

Membership Among Respondents

63%

80%

13%

35%

52%

76%

10%

31%

61% 70%

8%

21%

REALTORS® LandInstitute

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.

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.


• 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.


• 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.


• 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.


• 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.

Market Conditions and Outlook

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) in September 2015 from Levels One Year Ago

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.

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. from October 2014-September 2015 Compared to the Previous 12 Months

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 the U.S.* from October 2014-September 2015 Compared to the Previous 12

Months

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

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 2016 Compared to Prices in September 2015

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

Characteristics of Land Sales*

* Based on respondents’ most recent land sales in October 2014-September 2015.

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.

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**)

* Includes Canada, Latin America/Caribbean, and Other International. ** Multiple responses allowed, so percent shares will not sum up to 100 percent.

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 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)

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

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

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

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.

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.

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.

Land Sold More Quickly in Regions 2 and 6

100

62

120

90

160

78

105 90


Median Days on Market of Most Recent Land Sold from October 2014-September 2015, By Region*


Agricultural Lands Sold Most Quickly in the U.S.

45 60

180

126 120 100

180

100

Median Days on Market of Most Recent Land Sold in the U.S. from October 2014-September 2015, By Type of Land*


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..

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 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 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 Recent Transactions from October 2014-September 2015

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

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

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

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 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.

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

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 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

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 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 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


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.

Conclusions

• There was strong price and sales growth in commercial and residential 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.

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 614 respondents, a response rate of 2.7 percent. Regions 3 and 4 were the top regions of practice among the respondents.

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 Region 1, 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.

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’s region 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 for Region 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

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 estate professionals--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 Avenue Chicago, IL 60611 United States Phone: 800-441-5263

NATIONAL ASSOCIATION of REALTORS® Research Division 500 New Jersey Avenue, NW Washington, DC 20001 Phone: 202-383-1000