The Impact of Contract for Deed Financing on Minnesota Forest Land Markets

摘要

The impact of contract for deed financing on Minnesota forest land prices was estimated using nearly 8,000 sale records for 1989-2003. Even after accounting for favorable financing terms, contract for deed forest land sales commanded a substantial premium over comparable properties not sold on a contract for deed basis. Small forest land tracts and those sold earliest in the study period generated the greatest contract for deed premium. The study documented that virtually the entire price premium can be attributed to factors beyond the net present value of favorable financing terms. Possible explanations for this premium and the implications for forest resources management and conservation policy are discussed.