The Housing Boom and Its Effect on Farmland Acreage

This paper examines farmers land ownership decision to keep their farmland or sell the acreage to a non-agricultural enterprise. The boom in housing demand during the early 21st century caused a subsequent rise in land demand by housing construction companies. This, in turn, has significant effects on farmers choice to sell their farmland endowment and leave farming. Data from several public sources, including the USDA-NASS, U.S. Census, BLS, and BEA-REIS, is used to analyze the relationship of farm acreage with housing permit values. The Arellano-Bond dynamic panel estimator is used within a GMM framework to examine land ownership behavior of forward-looking farmers. Results indicate that a rise in demand for new housing significantly influences a farmer’s behavior to transfer agricultural acreage out of farming.