Economists' Outlook

Housing stats and analysis from NAR's research experts.

Q&A Corner: The Land Market Survey

The Land Market Survey is a collaboration of the REALTOR® Land Institute (RLI) and the National Association of REALTORS®. This survey gathers information and insights about land transactions among land real estate professionals that can be used as a resource in conducting land business.

Gay Cororaton, Senior Economist, Director of Housing and Commercial Research is the lead author of the report. In this conversational Q&A, they provide insights into the data, perspectives on how members can use the report, and the results they found to be most interesting.

How old is this report, and how did it start?

Gay Cororaton: The report first came out in July 2014, so it is now in its 8th year!

The report started in 2014 when the REALTORS® Land Institute (RLI) approached the National Association of REALTORS® (NAR) to gather more information about the land market and the transactions of its NAR members. Every new home construction or commercial real estate development starts with the purchase of land, yet there was little information about the land market transactions of NAR members or land sales in the United States, except for agricultural land values produced by the US Department of Agriculture.

The land market survey was conducted annually from 2014 through 2019. Beginning in 2020, land markets questions were integrated into the NAR Commercial Real Estate Quarterly Market Survey to have a more timely and frequent reading of land market conditions. Starting in May 2021, land questions were also asked in the monthly REALTORS® Confidence Index Survey that is sent out to residential members because residential land deals comprise the bulk of land transactions of NAR members and prospective members of RLI.

What question(s) is this report trying to answer?

Gay Cororaton: The report seeks to answer fundamental questions about the U.S. land market and land transactions of NAR members: what economic forces are shaping the demand for land, how much land is bought/sold and what types of land are being bought and sold and the location of these land sales, how are land values changing, who are land buyers and sellers, and what are issues regarding the development of land for residential or commercial use.

I think this is the only report I’ve seen that provides an assessment of the land market across all types of land, so it’s a very important report for NAR and RLI members and anyone who wants information on the land market. Admittedly, these are big questions and NAR and RLI are still seeking to estimate the fundamental question: how big is the land market in terms of number of transactions and the dollar volume of land sales? We are looking at getting this data from county records or MLS data.

What important trend(s) does this report capture?

Gay Cororaton: An important trend in the 2020 report is how the land market weathered the impact of the COVID-19 pandemic in contrast to the commercial real estate market which took a hit. NAR commercial members reported that the dollar volume of land transactions rose 3%, in contrast to the 3% decline in commercial real estate transactions, and the dismal 32% drop in commercial transactions of $2.5 million or over1. Land prices increased by 2% on average in 2020, according to NAR commercial members, while commercial real estate prices fell 6% in 20202.

NAR commercial members reported that the dollar volume of residential land sales rose 6% year-over-year, followed by industrial land sales, at 4%, and recreational and ranch lands, which each rose at 3%.

The strong demand for residential land has been underpinned by strong home buying activity as the 30-year fixed mortgage rate fell to a 50-year low of 3.1% in 2020. The report also reveals that the COVID-19 pandemic has increased the preference for nature- and rural-based recreational activities, which is indicated by the growth in dollar volume of transactions for recreational land. Sales of land for industrial use were driven by the acceleration of electronic and mail-order shopping that by 2020 accounted for 16% of retail sales from just 13% in 2019.

The survey also gathers information on the outlook of the land market in the next 12 months. Respondents in the 2020 survey expect an increase in land sales and land prices for all types of land in 2021, except for sales of land for office, retail, and hotel use. Respondents expect the strongest sales growth in sales of residential land (5.9%) with prices rising on average by 5%. Sales of timber land are also expected to remain flat.

Another important trend is that most land sales occur in the Midwest and South states. In 2020, 68% of land sales were in what the REALTORS® Land Institute delineated as Regions 6 7, 8, 9, and 10. RLI Region 10 had the largest fraction of respondents who reported a land sale (22.2%), followed by Region 7 (12.5%), Region 6 (11.8%), Region 9 (11.8%), and Region 8 (9.7%).

(Region 6 covers Arizona, Colorado, Utah, and Wyoming; Region 7 covers Iowa Illinois, Kansas, Missouri, Nebraska; Region 8 covers Oklahoma and Texas; Region 9 covers Alabama, Arkansas, Kentucky, Louisiana, Mississippi, and Tennessee; and Region 10 covers Florida, Georgia, North Carolina, South Carolina, Virginia, and Washington DC.).

How can our members use this data?

Gay Cororaton: Real estate is all about location, but this data will provide members with information on the big forces impacting the land market and where the land market opportunities are. With this information, NAR members have a good reading of the overall land market and can use that information when working with clients or planning their business strategy.

1 Real Capital Analytics
2 Green Street Commercial Price Index