One frequent Oregon real estate question buyers and sellers ask is ‘What’s an acre worth?’ When you think about it, this question is not so different than ‘What’s a car worth?’ That’s because each situation has significant variables.
With a car, the mileage and condition are both very important to arrive at an accurate value. Land, too has unique variables. What are these variables that affect the value of an acre and as an Oregon property buyer or seller, what is it that you may need to know?
What follows in not an exhaustive study of determining the value of an acre, but a summary of 6 key factors that affect the market value of Oregon acreage property. Spoiler alert: The actual answer to the value of an Oregon acre is ‘it depends.’
Research is Fundamental
There are plenty of places to find estimates on land values, including for Oregon acreages. But unless some specific and fundamental research is performed, such estimates can be meaningless, beyond providing a broad yardstick for comparison between states. Yet, even that can be a misleading endeavor.
For example, many think California land is more expensive than Oregon land. Yet an acre of land in Oregon could be worth considerably more than a California acre. How? Select one acre in Canby, Oregon (with a current population of more than 16,000) and the other acre in tiny Canby, California, (with a current population of less than 500). The simple laws of supply and demand apply, even across state lines. So to begin, demand is a function of value. The larger a population surrounding a given acre, usually the greater the demand and hence the higher the price per acre.
How Big Is An Acre?
Sources suggest an acre was first defined back in the Middle Ages as the amount of land that could be ploughed in one day with a yoke of oxen. An acre can now be specifically defined as an area comprising 43,560 square feet. For example, this would equal a parcel of 66 feet (1 chain, also known as 22 yards) by 660 feet (1 furlong, also known as 1/8 mile, or 220 yards).
6 Factors of Separation
The following six factors provide insights into some key components that help determine the value of an Oregon acre of land.
Factor 1: Location, Location, Location
To help determine the value of an Oregon acre, chief among the variables is the immutable characteristic of location. Why? For example, prime farmland located in distant locales can be worth less than somewhat lower grade farmland if the distant location requires significant fuel and related expense in order to transport crops to market. Location explains why waterfront property usually sells for more than property located some distance from a river or lake. Location also explains why view properties can command a premium.
Factor 2: Zoning & Allowed Uses
In Oregon, also high among the factors that impact the value per acre is zoning. Zoning can be influenced by federal, state, county, regional (like Oregon’s Metro government) and city regulations. For example, don’t expect to generate much income from a parcel of land designated as a wetland. There are fewer activities that can be performed on such a property and as a result, fewer buyers and therefore lower demand. This typically means a lower market value. Generally speaking, in many parts of Oregon, property zoned to allow residential, commercial or industrial use frequently commands a higher price than agricultural land.
Factor 3: Volume Discount
With some limitations, the larger the parcel, generally speaking the lower the market value per acre. This is true for several reasons. As a property’s price gets up into the higher ranges, particularly if we’re talking multiples of a region’s average selling price, there are simply fewer qualified buyers. As an example, consider how many buyers in a given area who may be able to afford a $100,000 property. This is a sizable percentage of the ‘buyer pool.’ Now consider how many buyers who may be able to afford a 3 or 4 million dollar property. Far fewer as the price increases. So while there are buyers for each price category, the price per acre is typically reduced with the increase in land size and purchase price.
Factor 4: Soil Types
There is a plethora of soil types, with various metrics to determine their characteristics and use. According to Oregon State University, we have nearly 1,000 different soils in Oregon. One broad method of grouping and evaluating soil types is known as the ‘class system.’ Broad groups of soils can therefore be denoted as Class I, Class II, Class III, and the like. As you might expect, Class I soils are considered the best and typically have very good fertility, superior drainage and are typically located in mostly level areas, often with slopes of no more than 3%. Examples of Oregon Class I and Class II soil types are Willamette Silt Loam and Woodburn Silt Loam.
Also as you might expect, Oregon’s Class VI and Class VII soils are considered less useful for agricultural purposes. One example of these is called Whetstone soil. While having low fertility, Whetstone is suited to to growing timber, but not cultivated crops. Erosion of poorer soils can also be severe. One of Oregon’s least productive soils is not even technically considered soil. Called Terrace Escarpments, this alluvium is typically located in steep areas which makes cultivating it so difficult.
Some crops grow significantly better with certain soils. Other crops, such as grapes, can be more forgiving and can actually thrive under a diversity of soil types, even if they ‘struggle,’ which is said to provide certain favorable wine characteristics.
While soils information on a given property can now be located online for a specific property according to each Oregon county, for many years the primary method of researching soil types was to either speak with an extension agent or view the ‘soil survey’ book issued for each Oregon county. These books were published by the US Department of Agriculture. As a result, they became the ‘bible’ for determining soil type and related information.
Factor 5: Water Rights
In addition to the above factors, access and legal ability to use water is a very significant element in determining the value of an Oregon acre. The Oregon Water Resources Department has a regional watermaster system, where each watermaster has a range of state-mandated duties. As a general rule, land with water rights is worth significantly more than ‘dry land.’ One reason is because irrigable land allows for more-and potentially more profitable-crops.
Factor 6: Improvements
Another important factor in determining the value of an acre are improvements. Key among these can be a home. However, even if a home is not present but a well and/or septic system is, and the property is zoned to allow a home, this can be the ‘dream scenario’ that some buyers who wish to have a new home built actually want. That’s because the zoning is already in place, as are some of the most expensive utilities like water and septic. As a result, the presence of absence of improvements is another element in helping to determine the value of an acre.
There are many components to evaluating the worth of an acre. To most accurately do this, it’s important that your Realtor review comparable properties in your area. This means utilizing information among truly similar properties sharing related characteristics, especially those which may have recently sold. An experienced Oregon acreage real estate specialist is conversant with the multiple factors necessary to most accurately gather, analyse and interpret such data.
Questions? Call a Professional!
Do you have questions about buying or selling Oregon property? Contact veteran Oregon Realtor Roy Widing for a free consultation using the convenient form below.