Abstract:
Criticisms to the new regulations created in 1994 governing dwellings in
Exclusive Farmland Use zones (zones where agricultural activities are allowed outright)
have triggered an overall scrutiny directed by the 70th Oregon Legislative Assembly. The
objective of this study was to examine the influence of the new regulations on the value
of farmland in the Willamette Valley with existing homesteads. A hedonic price analysis
of farmland sales in Yamhill County, which is located in the western portion of the
Willamette Valley, was performed to reveal the influence of the new regulations.
Estimation includes a test of functional form, examination of multicollinearity problem, a
test of heteroscedasticity, and a test for the significance of structural difference between
farmland markets with and without existing homesteads. Value of Yamhill County
farmland with existing homesteads was shown to have been influenced by the new
regulations. Specifically, during the transition years (1994-1997) when people didn't feel
much pressure from the control over new dwelling construction, significant value
increase due to the new regulations was not displayed. However, in 1998 when the
implementation of the new regulations became less ambiguous, higher demand for
farmland with existing homesteads has resulted in significant increase of the market
price. The price increase dropped in 1999, though, probably because of the tighter control
over replacement dwellings in Exclusive Farm Use zones.
