# Evaluate hunting land sales



## g/o (Jul 13, 2004)

Evaluate hunting land sales
By Steve Shultz, 
Published Saturday, December 16, 2006
I commend the recent articles and editorials about North Dakota hunting issues appearing in The Forum. I have found them to be both objective and comprehensive.

However, one aspect of the Dec. 3 article "Hunting for land" that troubled me was the argument put forth by several persons - and in particular, Duane Olson (the tax director of Hettinger County) - that hunters pay significantly more for land purchases than do agricultural producers and this is the major factor behind rapidly appreciating agricultural land values. I have discovered different results based on detailed analyses of the agricultural land sale markets both in the Southwest and the Prairie Pothole Region from 2000 to 2004.

There are several problems I see with the approaches used to comparing agricultural versus hunting sale values as presented in The Forum article.

First, it was not clear on what basis hunting sales were identified. (In my study, all non-local buyers were surveyed, and I determined that almost a quarter of all land sales to non-locals were actually to investors who do not even hunt).

Even more troublesome is the simplistic way comparisons were made using countywide average agricultural and hunting sale values. The well-established "comparable-sales" appraisal technique is what should have been used to compare specific hunting sales to nearby and highly similar agricultural sales. This approach was used in my study through the mapping of all sold land parcels, which enabled the site-specific condition of sold land (parcel sizes, soil productivity, and cropping patterns) to be quantified using geographic information system technology.

Just as importantly, the use of average (mean) land values for comparisons is inadequate as a few outlier cases of hunters paying high prices (yes a few greatly overpay!) will falsely imply that all (or most) hunter-buyers are overpaying. Instead, a median measure of central tendency should be used particularly in light of the relatively small sample sizes used for annual comparisons.

As an illustrative example, let's say there are five hunting sales in a county in a single year at the following prices (all measured on a per acre basis): 1) $400 2) $450 3) $475 4) $500 and 5) $900. The average (mean value) of hunting sales is therefore $545 but that is due to the high value of the uncharacteristic (outlier) sale No. 5. If that sale is removed, the average value is $456 or alternatively the median value of all sales is $475.

That is why the National Association of Realtors and most national newspapers report changing real estate prices using median and not mean values. An even better approach involves the estimation of a multiple regression model to statistically measure the impact of hunting sales while accounting for other parcel-specific conditions.

I would be happy to re-evaluate my findings if provided additional sales data from the few southwestern counties not included in the original research. As well, I, along with several colleagues at NDSU, am currently in the process of updating this study using 2005-2006 sales data.

Finally, I would like to address the contention that potential cases of non-local hunters paying higher-than-average market rate prices for land is the major factor behind recently escalating land values and the inability of farmers to expand their operations.

This is extremely unlikely for three reasons:

- Price premiums are nonexistent or minor (especially when evaluated across the entire southwest region).

- The total acreage of hunting purchases is relatively small compared to the total inventory of agricultural land in the region.

- Our surveys of hunter-buyers found that most lease land back to local producers (often at below-market rates).

In summary, landowners in the southwest part of the state should be happy they can potentially sell their land to outsiders for slightly more than local market rates and still farm their land. I hope future research and discussions on this topic will include more careful and objective analyses.

Shultz is director of the Real Estate Research Center, University of Nebraska-Omaha.


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## tsodak (Sep 7, 2002)

In summary, landowners in the southwest part of the state should be happy they can potentially sell their land to outsiders for slightly more than local market rates and still farm their land.

Do you suppose this gentleman has any idea how terrifying that should sound to anyone in rural America????

After all, we in rural America should be happy we are blessed to be able to become tenant farmers to the new ruling class of nobles, unless we should decide to leave the estate and go to town and become free men....

What blessed kings and queens we shall have....


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## Dick Monson (Aug 12, 2002)

Oh come on Tom, serfs don't know the differance.


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## tsodak (Sep 7, 2002)

That sounds so ridiculous I almost deleted it, then I got thinking that you know, it may just be pretty dam close to profound.... (or at least as close as I get to it...)


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## Chesador (Aug 15, 2003)

I believe that the economic law of "Supply and Demand" once again is the key to ND land prices. The reality is that the supply is decreasing and the demand is increasing. Prices will continue to rise.

In this law is the variable of who has the demand. If only farmers demand prime ND lands then the price is what farmers will pay. If however, hunters from Bismarck and Fargo who are added to the demanders then the price may increase slightly as the urban residents may well disposable income to fed by emotion that will entice them to pay more for a small parcel of land than would a farmer.

The preceding was ND residents only. Now add to the variable of demand the hunters from other states. They are very happy to travel to the beauty of ND and hunt lands for free or maybe a ham sent to their favorite landowners at Christmas. I good many of those NR hunters work in urban areas where their incomes may provide disposable income with which they buy bass boats and other toys to alleviate their suffering of living in their urban jungles. If they where to become properly motivated because they could longer gain access to ND hunting lands they might give up their expensive bass boats and other toys and invest in a few acres in ND. Of course they would buy enough No Tresspassing signs to protect their property. To them, No Tresspassing means don't even ask!

Remember the supply factor of the law of Supply and Demand? Supply of ND land can be decreased very rapidly by anyone leasing vast amounts of hunting lands such as guides and outfitters. When the demand decreases those who formally spent their disposable incomes on toys will instead buy a quarter, half, or even a section of land and POST if from everyone. They may well lease farming rights to ND framers but carve out dried up sloughs, tree lines and other areas from the plow and harvester. This cannot be good for farmers trying to make a living. Those farmers feeling the economic bite may in turn take a lesson from their South Dakota neighbors and Post their land and charge for access.

At this point the supply has decreased from: 
1. G/Os leasing prime hunting lands formerly open to all. 
2. Residents buying small parcels of lands for their own and posting. 
3. Non-residents buying quarter, half, and whole sections and posting it all.

The supply has decreased significantly at this point and the prices have doubled, tripled and more for an acre of farm land. Farmers in turn are having a problem because the cost of leasing farm land has also increased. Did I forget about taxes? At some point the state assesses the lands and because the value has doubled so will the property taxes. Another nail in the farmers coffin... What happens to wildlife is ND looses 20% of her agriculture? It could happen.

If all this wasn't bad enough add to numbers 1, 2, and 3 the Eastern style hunting club? That would be if a number of persons, let's say 50 to 100 who all pooled their funds under a signal manager who would for them purchase or lease lands under a LLC or S Corporation for the use of members only. Think of this as a hunting Time Share is which the shares could be bought and sold. I know of hunting clubs on Maryland's' Eastern Shore that own land and member can sell their share. A buyer can even MORTGAGE a share since it is Real Property!

Can the above scenario be avoided? The residents of North Dakota which includes farmers, hunters, small town and city people are doing their best to ensure that the North Dakota culture doesn't change from it's welcoming to all attitude. Posting land from all isn't part of that culture. Many farmers who post will allow hunting if you ask. Oh, they may want to keep the limited deer hunting to themselves or may fear stray shot from nimrods with buck fever but most like strangers. Deep down, most probably hate to have to post their land for any reason, be it safety or economic.

It is very easy to understand why North Dakotans dislike the concept of paying for access. They have a culture that left my hometown in Potter County Pennsylvania, the state's deer hunting capitol, some 25 years ago. In my opinion gaining access by a stranger has long left all but the most rural areas of the North East, South, Texas, California, and the Upper Midwest long ago. How long will it be before even North Dakota transitions into a non-hunting, pay for access culture that continues to consume more land access every day in other states?


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## gandergrinder (Mar 10, 2002)

> After all, we in rural America should be happy we are blessed to be able to become tenant farmers to the new ruling class of nobles, unless we should decide to leave the estate and go to town and become free men....


Will you in the future blame the noble class for buying all the land and making you a serf or will you blame the man in the mirror.

Life is full of choices.


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## DJRooster (Nov 4, 2002)

You are a serf unless you have the money to buy your way out of your demise. Pretty tough to limit who can purchase land. Hell people will pay hundreds of thousands of dollars just to join a golf course to play golf and buy leer jets just because the "like um." Some people are foolish enough to buy a thousand decoys and a trailer to haul them in just so they can shoot a snow goose. Land has been an excellent investment if you can figure out how to make it cash flow. This is the reality of the situation. Money changes everything including our North Dakota heritage.


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## Dick Monson (Aug 12, 2002)

At some point theory will collide with reality. Reality always wins out. I don't believe any community, nationally or locally, can sell out stragetic limited resouces and still survive. Does it make sense that selling off economic independance would produce economic dependance? Just asking.


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## Bobm (Aug 26, 2003)

Chesador has very nicely laid out the facts of how its went everywhere else and how its going to go in ND.

There are a lot of folks that don't want to admit it but freelance hunting in ND is on its last legs and hunters will never unite ( they can't even have a consensus on this board).

Economic independence is only important to those that don't have it. The sellers of their farms are probably set for life if they invest sensibly. Most landowners that would have a lot of equity when they sell out to the commercial hunting interests likely are older people facing retirement they don't care about the next generation they are concerned about their own old age. I'm not criticising these old folks just looking at the probable reality.

IF you are young and want to hunt the rest of your life you will have to form a hunting club and purchase land or move to Nevada/Idaho/Montana ect where lots of public land exists.

Even the public land is in jeopardy of the commercial hunting crowd. They have been trying to gain advantage on it for years, So far sportsmans groups have been able to stop them but money always talks....


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## DJRooster (Nov 4, 2002)

South Dakota believes hunting is economic development. As long as we have South Dakota winters in North Dakota we just have to look across the border and see our destiny. If global warming continues and we keep stringing together these mild winters these will be the "good old days" for the hunters of this millenium. The times they are a changing. Is it good or is it bad or is it a nuetral, well that depends on your perspective. And if you have money it really doesn't make any difference to you. This is just reality no more no less. Land purchases for hunting are just what they are and it doesn't make any difference if you are from Nodak or some other zip code. It does affect others but the person who is buying or the person who is selling doesn't care. Are they selfish? Well it depends on whose making the judgement. In my opinion it is none of my business. Business is business.


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## Dick Monson (Aug 12, 2002)

I'm not thinking about the hunting portion of the discussion per se on NR land purchase, although it plays a part. I am thinking about the discussion that revenue generated from hunting tourism and land sales is only a boon to the states economy, and I believe that is a false assumption.

*Steve Shultz said:*


> In summary, landowners in the southwest part of the state should be happy they can potentially sell their land to outsiders for slightly more than local market rates and still farm their land.


 To me that is paraphrasing the queen of France:


> Then let them eat cake.


Long term, it is impossible for the state to encourage the sale (through unlimited #s of hunting licenses) of non-replaceable resources like land, to gain a benefical financial position in the future. In that scenario the financial resources are moved permenently outside the state's future control and use. The money generated from rent, programs, and appreciation is just gone.

In his book _COLLAPSE_ author Jared Diamond details numberous societies that destroyed their communities by destroying or removing their resources (in this case landownership) beyond their ability to recover them. All of those extended communities became defunct. It is our legislator's duty to protect long term benefit rather than short term benefit for North Dakotans. In my opinion.


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## DJRooster (Nov 4, 2002)

If the money generated by the hunting interest stays in North Dakota because a person living in North Dakota is the owner and operator North Dakota does see benefit but if the owner and operator is not a resident of North Dakota so the money leaves the state then I question the economic benefit to North Dakota. There may be some trickle down benefits but we certainly don't get as much bang for our buck. Does Ted Turner owning huge chunks of realestate in Montana benefit Montana? And he is not the only one from outside the state who own large tracks of land in the west. Does this help their states or hurt their states or is it a nuetral? If I sell my land to a guy from Minnesota and then pay him cash rent and if their is a CRP payment attached to it for the non agricultural land and this payment goes to Minnesota instead of a North Dakota resident I'm not sure all this money leaving our state is doing us that much good.


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## Chuck Smith (Feb 22, 2005)

One thing this article clearly points out is that most people buying land are investors first then the possible hunter.

Let me give you an example.

I live in MN. Land in my area is selling for $3000 an acre. Ok I could possible invest $200,000. So that gives me 66 acres. Now of that 66 acres 50 is tillable. I hunt so I got 15 acres of woods or what ever. That 50 tillable I get $130 rent. So that means I *Gross $6500* a year.
_- I used rent because CRP payments are lower._

Now I can spend that $200,000 in ND. That will give me about 400 acres. Now lets say 300 is tillable or I can put into CRP and PLOTS. That payment equals about $25 an acre. So in that 300 acres I *Gross $7500* a year.

This is not Rocket Science. I just grossed $1000 more a year from rent or CRP. Plus if you speculate. Land Values will go up. Lets say that both places see a 5% increase in land values...That would mean the 66 acre new price would now be $207,900 and the 400 acre price would be $210,000. Again a gain of $2100. So If a person would own the land in one year they would gain $3100 more because they owned land in ND than MN!

So I read HUNTERS are buying all the land, I don't see it. I see the INVESTORS buying the land and hunting is just a bonus. With the posted signs is just people worried about liability and what not.


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## gandergrinder (Mar 10, 2002)

Dick,
We must read the same books. I think you should read Capitalism and Freedom by Milton Friedman. It will give you a little different perspective. :wink:

I believe that we will see a time in the future where most of North Dakota is cropped by suitcase farmers.



> In that scenario the financial resources are moved permenently outside the state's future control and use. The money generated from rent, programs, and appreciation is just gone.


I think Mr. Monsons point is valid if you take the stance of an isolationist but if you look at it from the perspective of the US as a whole then the ownership of the land by those outside ND makes no difference.

Besides Dick, it scares me when you term things like this


> outside the state's future control and use.


 Little red flags start going up in my eyes and they have a yellow sickle and hammer on them.

That thought scares me a hell of a lot more than the sale of some land to non residents.

That reminds me of a little quote from Walter Williams

"I believe that reaching into one's own pocket to help his fellow man is both laudable and praiseworthy. Reaching into another's pockets to help his fellow man is despicable and worthy of condemnation."


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## DJRooster (Nov 4, 2002)

Maybe, maybe not!!


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## Dick Monson (Aug 12, 2002)

Enjoying this conversation immensely. I will get that title and another that you had mentioned long ago by Smith I believe. This is only from the school of very hard knocks. Try as I might I cannot think of one industry that does not lobby for or implement protectionist measures. Governmets must do the same with natural resources, even privately owned land. There is strategic value to society controling the future of some resources. How much of the nation's oil should be sold over seas? How clean should the air and water be? What resources would be sold to North Korea? Canada long ago refused to export potable water. Both Japan and China export no native timber. Europe supports an inefficent ag industry with tarrifs because they starved 60 years ago.

Our mentality here is that of the frontier, that there will always be more cake to be mined. That is how we regard wildlife. If the state provides an unlimited number of licenses, they are in effect promoting land sales, and yet when wildlife populations crash, tourism dollars and farm revenue dollars too will still be gone.

(The most frightening information of the Shultz paper was that 40% of ag land value is propped up by the farm program, funded by a Federal budget that is falling like a rock down a well.)


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