Land Value Reports
Land is a natural resource that is valued for many reasons. Farmers utilize land to earn their livelihood and as a store of wealth for future retirement. Rural residents have increasingly sought open space for home sites and pursuit of a lifestyle. Developers seek financial opportunities to invest in and develop land for non-farm uses. For some, land is viewed as an investment and a hedge against inflation. This myriad of demands for land combined with its fixed supply continually alters its market price.
Land prices and expected changes in land prices are topics of interest to many. There are several sources of information on Michigan farmland values. The Federal Reserve Bank of Chicago reports quarterly farmland values for each state in its district based on a survey of lenders. However, Michigan farmland sales transactions are sporadically reported due to insufficient survey response. The USDA estimates the value of farmland and service buildings annually for every state based on a survey of farmers. Both of these surveys provide useful information on aggregate farmland values in the state. For land value information to be useful for individual decision-making, a more disaggregated measure of land values based on land type, location, and use is desired. The State Equalized Value (SEV) used to determine property taxes is set by township assessors at an estimated 50 percent of the market value of farmland based on comparative sales studies conducted annually. County Equalization Directors review the assessment rolls of local township assessors and make adjustments based on sales data. SEVs are useful in determining representative land values but are handicapped by the historical sales perspective upon which the appraisals are based.
Michigan State University (MSU) has also collected data on land values since 1991 by mail survey. The goal of the MSU study is to provide information on the value of land based on its agricultural use. The survey asks for information on the value of tiled and non-tiled land used to produce field and fruit crops as well as information on the value of land that is used for sugar beets and irrigated crops. The study also provides information on leasing rates and practices in the state. In addition, the study collects information on the non-agricultural use value of farmland.