Evaluating the Arkansas Land Market

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Evaluating the Arkansas Land Market

Bart Waldon

Understanding dynamics shaping Arkansas' rural land scene proves essential for owners weighing best times to buy, hold or sell acreage across the Natural State spanning 33.6 million total acres. As of 2022, average per acre valuations reached $3,160 for non-irrigated cropland and $3,750 for irrigated fields, with pasture and timber lands trailing at $2,590 and $2,420 respectively according to USDA data. Yet pricing fluctuates dramatically based on development potential near growing municipalities like Springdale and Fort Smith in the northwest corridor as contrasted by large cattle and lumber operations dominating southern and eastern rural zones.

With the average holding period for Arkansas farm real estate at 29 years per recent surveys, evaluating demographic shifts, water access constraints and area natural resource attributes provides key indicators for both owners looking to acquire new land assets as well as those considering the ideal opportunities to liquidate intergenerational farmland holdings.

Evaluating Market Indicators

Several indicators point to overall stability and steady, consistent growth in Arkansas land markets in recent years. The state has invested in improving infrastructure, technology sector jobs have risen, and population has gradually increased in urban regions. Arkansas also benefits from having one of the lowest costs of living in the nation.

While the 2007 housing crisis negatively impacted real estate markets nationally, Arkansas land proved resilient. The state did not experience the rapid upswings in land valuations pre-recession, nor steep declines post-recession. This insulation from volatility points to moderation and consistency as strong attributes of Arkansas real estate. With greater stability, both buyers and sellers can have higher confidence in market performance.

Regional Variations

Although statewide statistics provide helpful baseline understanding, it is vital to analyze local economic and demographic factors surrounding specific land parcels when determining true market value. Development momentum, infrastructure improvements, population shifts and employer changes in local areas impact land prices significantly.

For example, Northwest Arkansas has seen robust growth due to expansion of major employers like Walmart, Tyson Foods and J.B. Hunt Transport Services. Infrastructure upgrades, a thriving local university system and arts amenities add to quality of life. This rising profile and influx of new residents lead to greater land demand. Values for vacant property in Benton and Washington counties reflect heightened desirability.

Uses for Land

Intended use plays a major role in appropriate listing prices or offers when buying and selling land. Recreational lands with hunting, lakeside and river access command different prices per acre than crop fields suitable for soybean, rice or cotton cultivation. And vacant parcels cited for commercial uses like warehouses or manufacturing plants warrant higher premiums based on development potential.

Timber harvest potential also adds value for densely forested lands, while cleared pasture acreage holds appeal for cattle grazing uses. If subdividing larger land tracts for individual residential lots, costs factors like permitting, utility access and infrastructure must be weighed. While zoning and area trends lend guidance, envisioning future uses require some degree of speculation.

Comparable Sales Data

Gaining reference points through comparable land sales in surrounding areas helps anchor listing and purchase price decisions. As the old adage states, an asset is only worth what someone else is willing to pay for it. Referencing recent sales of similar acreage and land types provides this frame of reference.

Online sites like Lands of America aggregate listings and sales data for recent land transactions. Factors like road frontage access, terrain, deed restrictions and permitting requirements also contribute to price differences even between two parcels of similar acreage. Adjusting for unique attributes allows for an apples-to-apples comparison.

Holding Costs and Opportunity Costs

Outside of market sale price, assessing carrying costs and opportunity costs also come into play, especially for larger land holdings. Property taxes, insurance, basic maintenance like fence repairs and mowing costs accumulate yearly. Finance costs apply if debt financing was used to originally acquire the property.

And there are inherent opportunity costs for capital tied up in raw land ownership. Investing the value of a land asset into stocks, bonds or an alternative real estate venture offers potential for returns through appreciation, rents or dividends. When evaluating the economics of selling land, these options for redeploying equity present trade-off considerations beyond just a parcel’s market value.

Key Factors Impacting Arkansas Land Valuations

In summary, some of the key positive drivers supporting ongoing stable valuations and gradual price appreciation across Arkansas land markets include:

Infrastructure Investment

Federal and state funding for highway expansions, airport upgrades, sewer and water system extensions, broadband internet access and other infrastructure modernization projects enhance accessibility and desirability.

Population Growth in Northwest Urban Centers

Economic opportunities and amenities in regional hubs like Bentonville, Rogers, Fayetteville and Springdale attract both interstate relocations and migration from rural communities. This influx places upward pressure on area land prices to satisfy housing demand.

University and Tourism Expansion

Education centers like the University of Arkansas provide stable local economic impact. And Arkansas tourism continues reaching new highs, with nearly 30 million visitors in 2021. This migration and visitor activity fuels commercial land development.

Strong Agricultural Conditions

The rich soils and long growing season of Arkansas lands used for staple crops remain a fundamental value driver. International export agreements also play a pivotal role in commodity crop prices and farm income for local landowners.

Meanwhile, moderating influences that can periodically spur short-term price corrections during cycles of volatility or recessionary pressures include:

Localized employment concentration

Heavy reliance on major large-scale employers ranging from Walmart, Tyson Foods and J.B. Hunt on the commercial side to healthcare giant Baptist Health leaves economic cycles closely tied to the fortunes of these corporations.

Threat of natural disasters

While not historically prone to wildfires, hurricanes or floods, tornadoes do present a recurring seasonal threat. This potential damage risk contributes to insurance costs factored into operational farmland or improved lands.

Commodity crop sensitivities

For Arkansas lands used primarily for agriculture, commodity crop prices directly impact farm profitability and ability to service any existing debt. Prevailing prices on exports of staples like rice, soybeans and cotton fluctuate with harvest yields, energy costs, export sales and global trade relations.

Expert Consultation

The multitude of constantly changing variables makes definitively assessing the fair market value of Arkansas land a considerable challenge. Enlisting professional guidance helps provide current area comps, assist evaluating parcels based on best-use potential and aid negotiations – whether listing privately owned land for maximum returns or negotiating fair purchase deals on available properties. Those experienced in local land transactions offer invaluable perspective when navigating deals.

Final Thoughts

Given Arkansas' varied geographic features and multiple economic underpinnings, land in the Natural State diverges greatly in value depending on location, current use, and development potential. Yet market trends have shown exceptional stability in the state's real estate sector, even during periods of extreme national volatility. While cyclical fluctuations in commodity prices, residential demand and commercial investment influence individual parcels, the state benefits from sustained agricultural production, population growth in key economic hubs like Northwest Arkansas, and infrastructure investment. A land owner's or prospective buyer's local knowledge, research into comparable sales, and utilization of expert guidance all help reveal true market value that incorporates both broader trends as well as hyper-local dynamics. By making data-driven decisions and taking a long view similar to the state's characteristic steadiness, land transactions can yield robust returns for both buyers and sellers amid a cautiously optimistic Arkansas real estate environment.

Frequently Asked Questions (FAQs)

What regions of Arkansas are seeing the most land value appreciation?

Some of the highest demand and value acceleration is occurring in Northwest Arkansas metro areas like Bentonville, Rogers, Springdale and Fayetteville due to major corporate hub growth, influx of new residents, improved infrastructure and the University of Arkansas presence.

How do prices per acre compare between recreational land and farmland?

Quality cropland for staple crops like soybeans, cotton and rice often ranges between $2,500 - $4,000 per acre depending on soil, drainage and location attributes. Meanwhile, recreational lands with timber, lake or river access and hunting appeal generally range between $1,500 - $3,000 per acre.

Does development potential impact land valuation?

Absolutely. Parcels located near expanding infrastructure, economic zones, and population centers carry higher premiums for commercial, residential or mixed-used development potential versus similarly sized acreage in more remote locales. Proximity merits higher pricing.

What characteristics boost farmland values most?

Productive acreage with ideal soil composition, drainage, irrigation access and efficient field shapes/dimensions carry greatest value for row crop uses. Having highway and grain elevator proximity provides convenient access too. Investments like tiling and levees also enhance productivity.

How difficult is accurately pricing Arkansas land?

Pinpointing an exact price per acre can prove very difficult given constant market changes, location variances and multi-use potential. Recent comparable sales provide the best value benchmark. Consulting county appraiser data, the USDA Arkansas land report and a professional agent familiar with an area all help guide fair market price setting.

About The Author

Bart Waldon

Bart, co-founder of Land Boss with wife Dallas Waldon, boasts over half a decade in real estate. With 100+ successful land transactions nationwide, his expertise and hands-on approach solidify Land Boss as a leading player in land investment.


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