geatteaa 797 5W 7 Malta/z r95; .» F‘ 5b I m a ' Farm Land Market Situation ' in the Southwestern States L I B a 1946-54 RAR Y at 0mm?“ Sm: uunasa "Rs"? 3 ARKANSAS ---— TEXAS 'ooooooooooo 8o ___ ------— MISSISSIPPI -—-—-— LOUISIANA 40- \_i—l_ibj 2O I946 '47 '48 '49 '50 '5! '52 '53 '54 Volume oi land sales per 1.000 farms, Southwestern States. 1946-54 SQU-thwestem Agricultural Experiment Stations of Arkansas. Louisiana. Regional . . . . . n; _ Mississippi, Oklahoma and Texas, Farm Foundation andi Bulletin _ _ No 5 U. S. Department of Agriculture Cooperating TEXAS AGRICULTURAL EXPERIMENT STATlONl R. D. LEWIS, DIRECTOR, COLLEGE STATION, TEXAS PREFACE This background report 0n the farm land situation in the Southwestern States, including Arkansas, Louisiana, Mississippi, Oklahoma and Texas, is issued by the South- western Land Tenure Research Committee in its regional series. This is a situation report emphasizing the major developments in the land market since World War II. Informa- tion and interpretation are presented which will be of use to farmers, ranchmen, bankers, credit agencies, county agents and any others concerned with the buying, selling and financing of land transfers. Members of the Southwestern Land Tenure Research Committee arezv L. S. Ellis, Arkansas, Administrative Advisor R. J. Saville, Mississippi, Chairman Joseph Ackerman, Farm Foundation, Secretary H. J. Meenen, Arkansas L. R. Charlton, Arkansas B. M. Gile, Louisiana A. L. Bertrand, Louisiana H. A. Pedersen, Mississippi K. C. Davis, Oklahoma L. F. Miller, Oklahoma W. G. Adkins, Texas T. R. Timm, Texas B. T. Inman, Production Economics Research Branch, Agricultural Research Service, USDA This committee appointed a Subcommitee on Land Values in 1953 and requested it to prepare a regional publication on the real estate situation. The subcommittee is composed of: W. G. Adkins, Texas, Chairman L. A. Parcher, Oklahoma R. L. Tontz, Oklahoma V. B. Fielder, Arkansas A. C. Harper, Louisiana J. H. Southern, Production Economics Research Branch, Agricultural Re- search Service, USDA W. H. Scofield, Production Economics Research Branch, Agricultural Re- search Service, USDA, Advisor At the request of the regional committee, John H. Southern, Agricultural Research Service, U. S. Department of Agriculture, cooperating with the Texas Agricultural Exper- iment Station, assumed leadership and responsibility for writing the report. The subcommittee furnished information and reviewed the original draft which was then revised for this publication. Special acknowledgment is due the cooperation of th-e Farm Foundation, the Texas Agricultural Experiment Station for its editorial and publication facilities and the other state agricultural experiment stations in the region for their collaboration. Farm Land Market Situation in the THIS REPORT PRESENTS AND INTERPRETS LAND . market information in the Southwestern States—- , Arkansas, Louisiana, Mississippi, Oklahoma and ‘Texas-with emphasis 0n the major developments in the market since World War II. Information and interpretation will be of value to farmers, businessmen, bankers, credit agencies and any i others concerned with buying, selling and financ- 1 .. ing landstransfers. Also, such information will ‘ furnish the basis for further research into current and emerging problems in the market. i‘, During the 9-year period, 1946-54, the land market reflected the strength of southwestern , agriculture and the high level of general economic activity. Farm incomes were good, remaining at -_0r near record levels. Although mortgage indebt- {edness rose steadily it did not reach serious pro- ‘portions. Many buyers paid cash for land, and jothers retired indebtedness of long standing. - Prices for land increased steadily and fairly rap- fidly from 1946 through 1948, and again following ‘the Korean outbreak. Just prior to this outbreak, flin 1949 and early 1950, prices had begun to weak- 1 "en. Beginning in mid-1950 prices again climbed. lTfThe general trend has eased off since mid-1952. Although land prices reached record levels in ' all states, going above previous highs in 1920, there was no feature of the general land market that made it a “boom” activity. Turnover was rapid, at what might be “boom” rates only in a l sfew local areas, and speculative buying and selling ‘to cash in on rising prices, although playing a _ part, was not widespread enough to cause an important land market problem. Resales were inot excessive. Some farmers may have paid prices that were too high for land, but they still continued as the number one buyer. .~ Land price increases usually were 1 to 2 years j-behind rising incomes. This offered an opportu- nity to farmers to purchase land. Increasing " income was reflected in higher land prices in 5 some areas more quickly than in others, and i prices in 1954 in some areas were higher than i could be justified by expected agricultural in- comes. Despite the strong demand for land, the number of sales declined steadily from the 1946 peak. By 1953, the volume of voluntary sales was only half as great as in 1946. By the end 0f 1953 and in 1954, except in certain localities, "uncertainty began to dominate the market and prospective buyers and sellers adopted a wait- and-see attitude. THE LAND MARKET PROCESS i “Value of farms or tracts” as used in this ‘p report refers to an estimated market value which Sout/an/artern Statag 1946-54 JOHN H. SOUTHERN, Agricultural Economist, Production Economics Research Branch, Agricultural Research Service. U. S. Department of Agriculture is based upon currently observed land prices. “Price” refers to the specific per acre selling price of farms or units of land that were sold. “Value” refers to all farm property, while price refers only to the farms that changed hands. The farm real estate market is created by the actions of buyers and sellers, actual and prospec- tive, as they evaluate the factors which give land its present and future value. Their appraisals are expressed in asking and offering prices. In addition to the function of price-making, the land market is the most widely used means of transferring the land investment in agriculture from one individual to another and of allocating a large proportion of capital resources within agriculture. It provides ways for farmers to acquire ownership of land, the means to accumu- late, protect equities and satisfy indebtedness obligations. The market process does not always accomplish these functions. In some instances and during certain periods ownership and equities have been lost and capital accumulation has been negative. Since land as a commodity cannot be stan- dardized, as can its products, the market for it is imperfect and unorganized. Land moves only in relatively large units and at a low annual rate of turnover as compared with mo-st commodities. Land as sold varies in quality and in area. Its productive capacity may be high, low or interme- diate. It is not highly sensitive to day-to-day shifts in demand and to shortrun fluctuations in CONTENTS Page Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 3 The Land Market Process . . . . . . . . . . . . . . . . . . . . 3 Land Market Trends . . . . . . . . . . . . . . . . . . . . . . . . . 4 Land Values and Farm Income . . . . . . . . . . . . 4 Trends by Areas . . . . . . . . . . . . . . . . . . . . . .. 5 Volume of Sales . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Sales by Areas . . . . . . . . . . . . . . . . . . . . . . . . . 6 Credit Sales and Major Lenders . . . . . . . . . . . . . . 8 Extent of Mortgage Credit . . . . . . . . . . . . . . . . . 8 Major Sources of Credit . . . . . . . . . . . . . . . . . . . 8 Terms oi Mortgages . . . . . . . . . . . . . . . . . . . . . . .10 Buyers and Sellers . . . . . . . . . . . . . . . . . . . . . . . . . .10 Buyers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .ll Summary of the Real Estate Situation . . . . . . . .11 Some Interpretations and Emerging Problems . . . . . . . . . . . . . . . . . . . . .12 INDEX I50- &§.gz\ '2’/ "\~< 125- ' ‘ IOO- ARKANSAS -———-TEXA$ ooooooooooooKLAl-IOMA -i"—--—- MISSISSlPPI —-i--—LOU|S|ANA 1s- \\'V :1.“ I l l l l 1 | | | |94s '41 '48 '49 '50 '51 '52 '55 '54 Figure 1. Trends in land prices. Southwestern States. 1946-54. Index 1947-40 : 100. the general price level. Aside from its physical characteristics, land also is peculiarly subject to certain institutional impacts, such as population movements, mineral speculation, national credit policies, and community and regional location, that make its pricing a highly subjective matter. Therefore, the land market at any one time may not function perfectly. Evaluation of the land factor may become a problem not only to individ- ual buyers and sellers, but also to- the public, for as a1 resource, land can be wrongly evaluated and use . The land market reflects specific trends and adjustments in agriculture. It reflects who is buying and who is selling land, and therefore, expresses changes in ownership patterns. In the 1946-53 period, farmers were strong participants in the land market. Tenants purchased farms and farmers who were already owners purchased additional acres. However, during the 4 years, 1950-53, tenants participated less in the market. At the same time, farmers who were already owners continued to buy more land. Proportion- ately more nonfarmers purchased land as tenants dropped out of the market. The land market also reflects changes in capital requirements for agriculture as the land factor generally is the largest single investment item used in agricultural production. In special- ized types of farming, land may not be the largest investment item, but as a general rule this is the case in the Southwestern States. Land costs involving mortgages tend to be fixed for relatively long periods. At times they may take most of the farm income, leaving little for variable operating costs and family living. Since 1946, the land market has expressed increasing total capital re- quirements. Prices for land rose rapidly, and a significant proportion of buying was for tracts to be added to existing farms. The market process reflected changes in capital requirements in two Ways: through changes in the price paid for land and through adjustments in unit size. 4 Use of credit to facilitate land transfers important in the land market process. T market reflects the extent and type of availa credit and terms of repayment. In many cas credit allows sales which otherwise would not i1 made. The amount of credit used and the equi risk invo-lved, when combined with repayme terms and income prospects, may forecast pro lems for mortgaged owners, as well as for cre. tors, and may point toward emerging tenu changes. LAND MARKET TRENDS Like land values for the nation as a who, the level of land values in the five states is 1: result of many factors. In the postwar yea ._ general eco-nomic activity and farm inco q reached and remained near record levels over If nation. Incomes and land values rose steadi into 1948, starting a slight decline late in 4‘ year which continued through 1949. The outbr i of hostilities in Korea stopped the downturn farm income. Prospective buyers and sellers f =3 assured of a continuing period of good retu ’ As a result, land values again began a rise whi lasted well into 1952, easing off late that and in 1953. Total national income, after dro‘ ' ping in 1949, reversed its movement in 1950 a continued to rise through 1958. Lcmd Values and Farm Income Over a period of time, land values mo closely reflect farm income than any other facto such as, national income and the general level o, economic activity. It is difficult, however, find sizable areas in any of these states whe the value of land is based solely on its agricultur production and income. Mineral activity is Wid spread in the region, and in many localiti urbanization and the growth o-f population hav influenced land values. Special programs, suc as the Veterans Land Board purchase plan ' Texas, the Veterans Farm and Home Board pu‘ chases in Mississippi, and price supports an acreage restrictions also affect land values. Y in all states farm. land values moved 1n unlso with total cash incomes to- farmers (Table 1 ' Farm income in all states began to move upwa f about 1941 and in 1953 it was from three to s' times the 1940 level. Land values lagged an were low in relation to income during the earl years of the period. However, land values c0 tinued to rise after farm income had droppe Much of this rise since 1950 represents an adjus ment toward a farm income-land value relatio ship that existed in the late 1930’s and earl 1940’s. In all five states, land values reach record peaks about 1952 or 1953, exceeding i; 1920 levels by 25 percent or more. j Gross cash farm income is one index of fa l, conditions, but it does not reflect the entire inco I situation. Production and living costs of farme; did not rise as fast as commodity prices a l incomes in the early part of this 8-year peri In general, costs in agriculture rose in 1947 and " 1948 more rapidly than in the war years and the postwar period. In 1949, prices farmers paid for items used in production and living caught up with prices farmers received and since that time they have continued to rise (Table 2). The major effect was that the cost-price squeeze was felt in 1949 and was reflected in the easing of land values late in 1949 and early 1950. Each state showed a slight drop in values at that time, the first break that had occurred since before World War II. With the Korean action, prices farmers received for their products climbed again at a faster rate than costs and land values rose sharply in 1951. However, costs of produc- tion continued to climb as prices received began falling in 1952. As a result, values began to ease off in late 1952 and dropped by several points during 1953. While land values follow movements in farm income, they lag behind farm income changes a year or more. Information on the number of pounds of cotton and bushels of wheat required to buy an acre of land in appropriate areas is shown in Table 3. With both commodities, the Table 1. Cash receipts irom iarm marketings and index oi estimated value oi iarm real estate per acre. Southwestern States, 1946-54 Cash receipts from iarm marketings1 Percent oi 1947-49 average Index oi value Slate (Ind Y€ar per acre? Arkansas 1946 81 76 1947 94 90 1948 106 100 1949 100 110 1950 93 105 1951 106 120 1952 110 131 1953 104 128 1954 993 122 Louisiana 1946 75 83 1941 98 96 1948 104 95 1949 98 109 1950 95 105 1951 112 111 1952 128 120 1953 120 125 1954 1133 121 Mississippi 1946 50 34 1947 97 92 1948 1L6 102 1949 97 106 96 1L8 1951 108 122 1952 108 134 1953 131 139 1954 95" 130 Oklahoma 1946 79 82 1947 99 90 1948 106 98 1949 94 112 1950 87 108 99 127 1952 107 138 1953 90 133 1954 883 126 Texas 1946 70 84 1947 97 92 1948 99 104 1949 104 104 1950 105 102 113 121 1952 110 139 1953 97 134 1954 983 130 1 Agricultural Marketing Service, USDA. _ .» 1 Production Economics Research Branch, Agricultural Research Service, USDA. Index as oi March 1 i‘ i‘ Preliminary, based on 10 mohths, Ian.-Oct. 1954. Table 2. Indexes oi prices received by iarmers, prices paid by iarmers and total national income, United States. 1946-54‘ Prices received Prices paid Total national Year by iarmers1 by iarmers1 income? Percent oi 1947-49 average 1946 87 83 85 1947 1E2 96 93 1948 108 104 105 l§§3 3? l3? iii 1851 11 1 113 131 1852 106 115 138 1853 95 112 144 19544 S3 113 142 1 Agricultural Marketing Service, USDA, prices paid include commod- ities, interest, taxes and wage rates. 1 Based on estimates by the U. S. Department oi Commerce. 3 Preliminary. amount required to buy an acre of land has more than doubled, whereas prices for each commodity changed very little during the period. This illustrates how land prices, relatively low at one time in terms of the ITIEIJOI‘ commodity produced, may change in a short period to become relatively high in terms of that same commodity. Incomes to farmers are peculiarly vulnerable to conditions that may not be reflected in the general level of business activity. Total business activity and national income may move to higher levels, while at the same time farm incomes and land values may drop considerably. In the South- western States, the chief sources of farm income are cotton, wheat, rice and beef cattle. Much of the rice, cotton and wheat produced goes into export channels, and during and since the war they have been in great demand. Total cash receipts from these crops remained high through 1953, but total income from livestock dropped more than 40 percent from 1951 to 1953. The large decrease in income from livestock was felt widely as many farmers had expanded their live- stock enterprise under the encouragement of high prices and the desire to diversify their land use. Another major factor in the drop in net farm income was the continued rise in costs which farmers had to pay. Costs of production on rice and cotton were heavy and continued to rise while unit prices had eased slightly. Increasing supplies with no expansion in demand, pointed toward lower prices. In either case, the final result appeared to be lower incomes in the imme- diate future. Trends by Areas Within most areas of the five states, much of the increase in land values occurred during the war years, 1941-45. Most lands had doubled or Table 3. Quantities oi cotton and wheat required to buy an acre oi land, 1946-53 Year Cotton, pounds ot 1int1 Wheat. bushels? 1946 175 12.8 1947 206 14.3 1948 209 16.1 1949 275 27.9 1950 221 23.2 51 297 25.8 1952 337 29.8 1953 369 28.7 1 Based on Texas average annual price oi cotton and average annual selling price of all bonaiide sales o1 iarm land in Ellis county, Texas, a cotton-growing county. 2 Based on Texas average annual price oi wheat and average annual selling price oi all bonaiidesales oi iarm land in Sherman county, Texas, a wheat-growing county. 5 (‘Q V \ 0 s a Q \Qv0'Q’Q v v 0 ~4_,O >000000- " *1 ' ~ l-‘1?:21':’:‘:':';‘§'0}°$'we. . s o; - w’ 4 0.0.0,f.t.t%§':.;.0.0.0‘ ‘y .0;0‘.0.;...."¢ ‘ ‘ ~ ~\!0.¢:.‘_ . v O - § M» ~ 0 * 0 ° 9 '¢‘~‘0‘0‘s.0 0% 0 4 ~ 0.0.0.0 0.0‘9';§ 5 ‘Q g Q 0 O 0 O 1,: 94,9 ~;':,;;.~."_. '. _. __ , . . _ . \ n. \\s’; x‘ I‘! ‘y’; 'f.:‘.:.§'.':.g $0.0. ' .v _ ‘o’ ' ‘ l4- . o‘ " 39:95.0 0 0.0"0~ _ » 00W ‘¢o 9' ' _ V 1 ‘ ,‘-'¢'Q 0.‘ . A ' '30:‘: :Q:0:0:0:0,.'.;g;¢..... v _v K'- h 0 3.90.0 0,:,:¢.¢'0’0 0.0‘0,:,‘, QQOQ”! l:':.'.'.! O 5 Q.Q.'Q:Q:Q:Q:O.Q’ \ Q‘ q: ' :':'0 0\ 0'0’. 'q.0':°:.:'0.0."..':.:'O"I59.' ~fi d; .303» . I0f0,0_0.0,0§ 0/,‘ '0,¢,¢/0 0 0,- 0‘ 7 ' * Q 0..O.'¢.'0:'0f':‘:..‘:'0' . '_. 4 Q Q 33%; ’¢'°:‘0'0 ' ' ° ~ 0 0 0 O 0 0% 0 0 Oils ~'§¢°0'0 0 0 0 .Q§_‘ »00.0,0,0~ 0,.¢00.00000,- g 1 _ 00 000 000000000,‘ $25k. ii‘ .\ , ' C 0_0.0,v.vi¢flv,fpfof0f§g~a I ‘Q 1 v v / . _ r 1, "'§v.~.- _ ' 8 ' ° . n0‘; s.‘ "if," "0'Q\°0'::0:0Z~;0?-'- o 0 0N 0 0 4 ' I 1 |P~§ 9.3.20 o I,‘ ' ‘- w .‘~ a =0 ~2~.':.9»° ' lawn § 3 4 \ ' 0 Q ' . ’ ’ . $2,111 a. - y 71-‘ _ , . '. o’; 0 03.30.03 \ ' ‘ 1'0‘ ‘ o o . I i I ' ' . " 5'0 0‘ . '0‘~'0‘0 v - 0 m] "g0 0 a . . o; 0.0.0.0‘; 0. .0, , , , 4 0 Q .0‘ ' F _'..‘0.v po:..';Q...0 g...‘ ,9. g 0 0.0.:.;‘:.:.:. ‘\ \ 0. 0 s 0 o o 0 0 * 0000000000000‘ \ '..'0'0'0.Q.0'0‘~'0:0:0:0.0:':9. lb ,5.‘ F"'€;-"/’ ' . Q 0 I \ {'3 @461» '~ 0 0 4 \ '4 \ _00o0000 0 0Q!» ¢.~ ‘vkx 2.9.. . 3:~9.2.;.2.:-:»:-2.:-:»:~t~t»:~:~.-:-t ‘~31. m7.“ L‘ "- \ l.’ '1 I 31°?‘{I53}?E4'8‘?“0";‘;‘:':‘;':°:'6‘:‘:‘;‘;‘: ' ' ' -" ' - o» 0 0, . .0 0'0.0.0.0.0‘0.0.0. ‘ ' / . ' "" 20¢’ ' .0‘o'0'0'0'0‘/ ' Q I946 Figure 2. Pounds of cotton required to buy an acre oi land. Texas Blackland Prairie, 1946 and 1953. more in value from 1940 to 1946. Values again increased an average of 50 percent 0r more in each state after 1946 (Table 4). In general, values have climbed the highest in areas with a great deal of urban and industrial development, increasing population, an increasing demand for rural residences and in areas of intensive agricultural development. Such areas include the three-county corner of Northwestern Arkansas, the Coast Prairie of Texas and the Gulf Coast areas of Louisiana and Mississippi. A great deal of agricultural development and intensification accompanied the residential and urbanization trends. Northwestern Arkansas has shifted rapidly from fruit and general farming to become one of the major broiler-producing areas of the United States. Urbanization also has shifted land uses away from agriculture in areas adjacent to such cities as Dallas and New Orleans, and it has raised values in line with nonfarm uses. These combined factors caused land values to increase almost threefold in such areas since 1946. Areas where values have doubled on the average since 1946 include the more productive lands devoted almost solely to commercial farming and lands that are potentially more productive when placed under more intensive utilization through land clearing and pasture development and through supplemental irrigation. In the first category are the Mississippi delta lands in Arkan- sas, Louisiana and Mississippi, the wheat and Table 4. Estimated value oi farm land per acre, South- western States. 1946-53‘ Mfificgi 1 Arkansas Louisiana Mississippi Oklahoma Texas — — — — — — ——Do1lars——-—-————— 1946 44.25 61.30 44.48 39.22 35.63 1947 52.40 72.80 48.53 42.75 39.79 1948 57.84 72.53 53.43 46.74 46.03 1949 63.35 84.36 55.73 53.29 46.81 1950 60.18 82.21 55.42 46.21 1951 69 87.39 63.84 60 57 54 76 1952 75.10 94.21 70.16 65.46 62.98 1953 73.48 98.08 72.60 63.40 60.58 1954 70.05 95.28 67.94 59.54 59.15 lProduction Economics Research Branch, Agricultural Research Ser- vice. USDA. 6 cotton lands of Western Oklahoma and the Plains of North-central Texas. In the sec category, areas that hold promise for more in ‘ sive use through development, are included r, of East Texas, the Coastal Plains and Bro Loam area of Mississippi and some areas of Ea ern Oklahoma. Supplemental irrigation in m localities of all states has influenced land valu c. to a marked degree. Values increased the least in the far wt grazing lands, the older irrigated lands of b0 the Upper and Lower Rio Grande Valleys in T as, the rougher phases of the Ozark Uplands Eastern Oklahoma and Northern Arkansas, (wi the exception of the three-county area mention above) and the upland areas of Louisiana - Mississippi. Volume of Sales The number of voluntary land sales measu . the degree of activity in the land market in :5 one year. Sales usually increase in periods W g, land values are lagging behind rapidly increasig farm income. Sales usually ease off, and l] become relatively low, when farm incomes we bilize or trend downward. These general characteristics of the mar have not held true in the Southwestern States; this period. Voluntary sales reached their 1M“ war peak in 1946 and have dropped consistent since that year, even though farm incomes higher and tended to remain high. The o I exception was the slight increase in sales in states following the Korean action in 1950 Whl demand for land was exceptionally strong (Tabf 5). However, beginning shortly after this actio the trend in volume of sales turned downward again. In all states, the number of sales in 1?, t‘ was down to nearly half those of 1946. This almost steady decline in sales since resulted primarily from the small number o, tracts or farms offered for sale rather than fro o. lack of demand. Reports from real estate deale i in the five states show that many prospectiff buyers of land have been unable to find tracts farms for sale. Owners of land have not bet willing to sell at what might be termed attracti offering prices. Such a steady decline in numi of farms offered for sale has important impli tions on tenure trends. Opportunities for you ' men to get started as owners and for tenants vfl become owners are more limited. Many tra sold do not offer adequate opportunity for succ‘ to the person wishing to operate the unit as t; farm. Such tracts are economic in size only . added to other farms. Sales by Areas The peak in transfers occurred in nearly a states in 1946, the Texas peak occurring in 194 Volume as measured by sales per 1,000 fa was relatively higher in Arkansas than in th other states and remained higher through.195'. .olume of sales was relatively 10W in Louisiana Mississippi throughout the period. Total qhansfers include single fields and tracts which themselves are not complete farm units. The number of complete farm units changing hands in gany 1 year was considerably less than the actual aivnumber of sales. ' “"- Acreages sold in all states dropped by the end of 1953 to two-thirds o-r less of the 1946 acreage. While widespread data are not avail- fable, local county studies show that since 1946, ‘except in established grazing areas, approximately one-fourth to one-third of the total farmland had %been transferred. As values Were rising most of the time, the dollar volume of sales did not drop g as much as number of sales and the acreage sold. . In Arkansas, sales volume has been highest i in the hilly uplands where acreages are small. » Many out-of-state residents have made purchases f in the area, which includes the Ozark and Oua- chita Mountains, since 1946. Many of these buyers later found that the soils are relatively low in productivity and that the area is subject to short but severe drouths. As a result, many ggof these holdings are soon back on the market fifor resale. Delta lands have moved at a uniform {though slow rate. Acreages are large and per-acre legs-amount of capital is required for purchase. In fthe Coastal Plain, volume of sales has been low. giefMany pf the tracts offered have been purchased ilby buyers interested in adding to timber holdings; i such tracts usually are removed permanently from the farmland market. 1 In Texas, transfers have declined nearly a ‘i. half since 1946, but sales volume in the irrigated areas of the Lower and Upper Rio Grande valleys iLPdPOPpGd relatively less than for the State. Irri- ggated acreages were in great demand during this fperiod, particularly for residential and intensive agricultural uses, and because of the severe drouth in nonirrigated areas. Also, particularly in the ‘Lower Rio Grande Valley, irrigated tracts have \ been subdivided into small acreages, 5 to 20 acres, l which permits buyers to handle the financial i. obligations even though per-acre values have been I 1 __. V, if i: ‘, l a»? TI 1,11 fr J1 lliiiiifi I 46 I954 l values high, with the result that a fairly large fARKANs/xs LOUISIANA MISSISSIPPI QKLAHOMA I954 I946 Table 5. Estimated number oi voluntary farm land sales and number of sales per 1.000 farms. Southwestern States. 1946-53‘ Year beginning Arkansas Louisiana Mississippi Oklahoma Texas arc All voluntary sales 46 11 878 4 166 8.205 11 331 18.360 194 8 173 2 686 7.354 8 605 16.376 1948 8 933 2 804 6.115 7 646 2 349 5.321 5 683 10 578 1950 8 129 2 219 6.187 6 736 12 351 1951 8 929 2 0 5.515 7 017 13 080 1952 7 862 2 241 6.010 5 992 10 768 1953 5 846 2 219 4.843 5 234 9 976 Number oi voluntary sales per 1.000 farms 46 75.0 39.4 48.1 73.8 53.5 1947 52.1 25.2 42.6 57.7 47.0 1948 57.5 26.1 35.0 44.8 34.4 1949 49.7 21.7 30.1 40.5 33.4 1950 52.8 20.5 35.0 48.0 39.0 51 58.0 21.8 31.2 50.0 41.3 1952 51.1 20.7 34.0 42.7 34.0 1953 38.0 20.5 27.4 37.3 31.5 Index of voluntary sales per 1.000 iarms 1947-49 = 100 1946 141 158 132 155 140 1947 98 102 117 121 123 1948 108 107 98 94 90 1949 94 89 85 85 87 1950 99 84 99 101 102 109 90 88 105 108 1952 96 85 96 90 89 1953 72 84 77 78 82 lProduction Economics Research Branch. Agricultural Research Ser- vice. USDA. high. An additional stimulus to a high rate of land sales in this irrigated area was the promo- tional aspects of land development. Development companies were organized to develop, subdivide and finance land sales. In the Lower Valley, this type of selling occurred rapidly through 1948, but was checked somewhat by the severe freeze of 1949 and by the lack of water to carry out anticipated irrigation enterprises. A large pro- portion of this buying was by out-of-state resi- dents. A further impetus to land sales throughout Texas has been the Veterans Land Board pur- chase program. Fairly large tracts of land were broken up to sell in small acreages to veterans. The Upper Rio Grande Valley was affected by urbanization of a great deal of farmland. Large areas of irrigated valley, while still producing crops, were brought into the E1 Paso city limits. In the grazing lands of the Edwards Plateau, Central Basin and Rio Grande Plain, transfers TEXAS I I -'-‘==‘-e 11:? t '51:‘ < 3 I946 Figure 3. Average price per acre of farm land. 19-46 and 1954. I954 declined to almost an all-time lOW. Many trans- fers of grazing holdings are within families, and such tracts seldom are placed on the market. Also, these areas suffered prolonged drouth which has decreased interest among prospective buyers. Sales volume declined in East Texas, the Coastal Plain and the Blackland Prairie, but in the latter area the market remained relatively more active. Total volume of sales in Oklahoma followed the regional pattern of decline, but the rate of sale in the eastern half of the State remained relatively higher. Ownership tracts in this part are small with fairly low per-acre values. Much of the buying has been for the purpose of adding these small tracts to existing farms. Many small ranches or livestock farms have been established by combining separate tracts into larger units. Sales were relatively low in both Louisiana and Mississippi during the entire period. The rate of sales per 1,000 farms in these states was only a little more than half the rate in the other three states. As a large portion of these states is woodland, held by timber companies and in national forests, much of the land is not subject to the usual farm land sale transaction. CREDIT SALES AND MAIOR LENDERS An important phase of the land market process is the way in which land transfers are financed. A buyer who pays cash for a farm or a tract of land, even though the amount may be exorbitant, is much more secure in his possession than is the buyer who uses credit unwisely. Also, the buyer’s possession is more vulnerable if his equity in the purchase is small, or if to fulfill his land indebtedness obligations, he must unduly contract his operating capital or the level of living of his family. Practically no mortgage credit is extended in the Southwestern States under flexible terms that provide for payments related to income from land. Thus, extent of use and amount of mortgage credit reflects an indebt- edness item of an inflexible nature. Also, the amount of credit available affects the composition of the market by determining the number of prospective buyers able to compete for land. If credit is “tight” and if only cash or high equity transactions are possible, volume of sales will be reduced considerably. At times liberal credit may have increased prices paid for land, particularly if such credit were available during a period when strong demand had already caused a rising market. Extent of Mortgage Credit The Southwestern States in the 1946-53 period had a relatively low volume of farm mort- gage indebtedness. In the war years, land owners liquidated obligations dating as far back as the 1920’s, and a relatively high proportion of farm real estate sales during World War II were for cash. Thus, total mortgage debt in 1946 probably was at about the lowest point since 1920. How- 8 ever, credit sales increased steadily and the age indebtedness for each credit transaction shown a steady increase. Thus, the availabi and terms of real estate credit have bec factors of increasing importance in the »l market. Credit transactions were at a relatively f 5-; level in 1946 but increased in proportion t0 f ;_‘ sales in 1947 (Table 6). Credit sales contin ‘ to increase through 1949 to about half o-f all s and have remained at about this level. ' At the end of 1953, credit transactions W running from half of all sales in Oklahoma more than three-fifths of all sales in Te f,‘ f Credit sales in the other states fell within range. The special program for purchase of for veterans in Texas had reached such pro tions that in 1953, two out of every five = were to veterans. These sales were credit tr actions financed by conditional sales contr Mississippi also has a veteran’s land (and U purchase program, which adds to that S = credit sales, but the volume through 1953 low. The Oklahoma School Land Commission ';_ been a special source of credit, but the volum loans handled has been low. ' With the proportionate increase in c f sales has come a steady growth in outstan_ mortgage indebtedness. By 1953, this indeb ness was about 40 percent above the 1946 ind edness in Louisiana and about 70 percent a], indebtedness for that year in Texas and Arkanf However, the proportion of total value of =71 real estate represented by mortgage obligati, had changed very little. In other words, e: though outstanding mortgage indebtedness _ climbed, land values increased at about the 5, rate and apparent indebtedness represented - heavier obligation on all land in 1954 than it , in 1946. In all states, total mortgage ind edness was less than 10 percent of the total v“; of farm real estate. On the other hand, indeb ness on new farm purchases in many insta” was extremely heavy. In 1953, mortgage f on farms purchased averaged as high as 70 r‘ cent of the purchase price in some Texas coun l, and more than 50 percent in most counties. -. Major Sources oi Credit Sources of credit influence the lanli ma, process through the amount and terms of 1' Table B. Credit sales as proportion of all voluntary transfers. Southwestern States. 1946-54‘ Year ending Arkansas Louisiana Mississippi Oklahoma March 1 ' — — — — —- Percent — — — — — ‘ . 1946 29 38 45 40 46 ?' 1947 35 43 45 44 49- 1948 39 58 53 50 53, L, 1949 44 59 5U 61 1950 45 58 56 53 60 i- l951 40 53 55 46 591, 1952 46 49 45 64 ; 1953 55 55 57 50 61.‘ ; 1954 55 57 65 53 63‘- lProduction Economics Research Branch. Agricultural Research, vice. USDA. ~ . gdvanced to buyers. During 1946-54, the amount if credit available was considered ample except “fin 1953 when national fiscal policy created a H-ifjttight” credit situation. During the war years, the significant change 71in sources of credit was thegradual decrease in fCIGdlt extended by the federal land banks for ’l_and purchase. The volume of new mortgages extended by these banks held up fairly well, but éhe total farm mortgage debt held by them de- freased steadily throughout the war years and terwards (Table 7). In 1946, outstanding ydebtedness held by these banks was only a little m than half the amount outstanding in 1940. ppraisal policies and an upper limit on the roportion of appraised values that can be loaned mbined to decrease mortgage lending by the _nd banks except for their activity in refinancing 5i d in improvement loans. Outstanding mort- *1». debt held by the land banks includes all ortgages held and does not represent purchase ortgages alone (Table 8). For example, less , an 10 percent of the total credit extended by fl land bank in Texas in 1953 was for purchases <91 land. Information from other states also dicates that only a small proportion of total l le 7. Distribution oi dollar volume of iarm mortgages recorded, by type oi lenders. Southwestern States. 1940 and 1946-53” Federal Land .19 Bank and Indi- Commer- Insurance Miscen‘ Land Bank viduals cial banks companies “nifus Commissioner n 9'5 — - — — — Percent — — — — — — 8 28 16 l7 7 24 43 20 6 9 29 3U 26 5 1U 31 Z4 31 4 8 25 25 37 5 9 26 25 32 3 9 Z4 27 9 9 25 Z4 31 11 3 23 21 37 11 19 44 Z2 4 11 15 43 25 7 10 14 42 19 11 14 1U 43 24 9 14 12 44 19 9 16 10 39 24 12 15 1U 39 23 11 17 12 35 14 17 22 14 30 17 13 26 17 27 35 7 14 16 33 Z6 15 1U 15 36 24 18 7 13 41 27 9 1U 15 34 26 16 9 13 35 23 20 9 15 34 24 19 3 12 27 22 16 23 13 23 21 19 24 10 29 19 20 22 15 34 21 2U 1U 11 34 23 23 9 12 36 20 24 8 15 32 18 27 8 14 Z8 16 31 11 13 29 15 33 10 12 32 17 27 12 15 26 17 27 15 23 27 14 24 12 13 34 17 28 8 11 35 16 31 7 12 32 16 35 5 17 35 14 29 5 15 29 14 34 8 16 28 11 39 6 18 24 14 36 8 19 19 14 37 11 Mortgages recorded" include those mortgages filed only in a critic year. and do not include all mortgage indebtedness out- n mg. rm Credit Administration. Table 8. Distribution of farm mortgage debt outstanding. by type of lender. Southwestern States. 1940 and 1946-541 State. Federal . All Yea, Federal Farm Farmers lnfe open Others Au as of land Mortgage H°me m5‘ ating 2 len ers ]¢m_ 1 banks Corp Adm. cos. banks -— — — — — Percent — — -- — — — Arkansas 1940 27.3 9.1 7.3 18.4 4.8 38 1 100.0 1946 16.6 4.4 14.6 22.3 7.8 34 3 100.0 1947 14.6 2.7 14.5 23.9 11.9 32 4 100.0 1948 13.4 1.9 14.5 28.8 12.4 29 0 100.0 1949 13.0 1.4 13.2 31.6 11.5 29 3 101.0 1950 13.1 1.0 12.2 35.0 10.9 27 8 100.0 1951 12.4 .7 11.8 35.9 11.3 27 9 100.0 1952 11.5 .5 10.9 36.6 11.4 29 1 100.0 1953 10.9 .3 10.1 37.7 11.5 29 5 100.0 1954 10.5 .2 9.3 40.1 10.7 29 2 100.0 Louisiana 40 41.0 8.2 1.9 12.9 11.0 25 0 100.0 1946 26.3 4.9 15.3 13.6 10.4 29 5 100.0 1947 24.4 3.1 14.3 13.8 15.1 29 3 100.0 1948 23.6 2.3 14.2 14.7 18.0 27 2 100.0 1949 23.3 1.8 13.0 16.0 18.8 27 1 100.0 1950 23.6 1.3 12.2 18.6 19.8 24 5 100.0 1951 21.7 .9 12.3 18.0 19.8 27 3 100.0 1952 19.9 .6 12.1 18.8 19.4 29 2 100.0 1953 18.6 .4 12.0 19.8 20.3 28 9 100.0 1954 17.9 .3 11.3 21.2 21.2 28 1 100.0 Mississippi 1940 33.8 7.9 1.9 20.9 8.1 27.4 100.0 1946 20.9 4.0 15.1 21.0 8.0 31.0 100.0 1947 19.4 2.6 15.8 21.0 11.7 29.5 100.0 1948 19.2 2.0 16.7 22.6 12.3 27.2 100.0 1949 19.0 1.4 16.8 23.6 11.9 27.3 100.0 1950 20.0 1.0 17.0 24.3 13.4 24.3 100.0 1951 18.7 .7 16.4 25.4 12.9 25.9 100.0 1952 18.2 .4 15.5 25.4 13.0 27.5 100.0 1953 17.0 .3 14.6 25.6 13.0 29.5 100.0 1954 16.6 .2 13.8 26.6 11.8 31.0 100.0 Oklahoma 1940 23.6 10.5 1.1 17.5 2.7 44.6 100.0 1946 17.7 5.5 6.2 15.6 6.0 47.0 100.0 1947 17.7 3.4 9.1 15.7 8.0 46.1 100.0 1948 16.3 2.4 9.3 18.5 8.8 44.7 100.0 1949 16.3 1.6 8.6 22.1 8.9 42.5 100.0 1950 16.6 1.1 8.2 25.5 8.9 39.7 100.0 1951 15.8 .7 8.2 28.8 8.2 38.3 100.0 1952 15.3 .4 8.3 30.8 7.5 37.7 100.0 1953 14.2 .3 7.5 34.4 6.8 36.8 100.0 1954 14.6 .2 7.0 35.0 6.5 36.7 100.0 Texas 1940 46.8 11.0 .8 20.3 2.6 18.5 100.0 1946 37.1 6.4 6.0 24.4 5.4 20.7 100.0 1947 33.1 3.7 6.5 25.3 7.5 23.9 100.0 1948 27.7 2.6 6-5 30.5 8.1 24.6 100.0 1949 24.7 1.7 5.6 35.5 7.5 25.0 100.0 1950 23.3 1.2 4.9 38.6 6.8 25.2 100.0 1951 21.6 .8 4.5 39.8 6.3 27.0 100.0 1952. 21.6 .6 4.1 39.8 6.2 27.7 100.0 1953 21.1 .4 3.8 41.4 6.0 27.3 100.0 1954 21.6 .3 3.4 42.1 5.5 27.1 100.0 1 {tlggiultural Research Service. Production Economics Research Branch. 2 Consists mainly of individuals and commercial loan companies. credit extended by this agency was for the purchase of land. Other lenders, especially insurance companies. made some loans for refi- nancing and improvements, but the volume of such loans was not as great as that extended by the land banks. Gradually, the insurance companies have financed an increasing number of land sales. The volume of outstanding farm mortgage debt held by insurance companies increased in all states, more than doubling in Oklahoma, Texas and Arkansas from 1940 to 1953. The loan policy of insurance companies has been adjusted toward the level of current agricultural incomes; it has recognized some of the techno-logical changes that have occurred in agriculture. However, insurance companies have been highly selective in all states, both between and within areas. For example, very few loans have been made in East Texas, Eastern Oklahoma and in the hilly areas of the other states. In the Texas Blackland Prairie and the Mississippi Delta, insurance companies were active in the loan field, but usually limited their 9 loans to adequate-size family farms with a history of good production. Individuals, chiefly sellers, were an impor- tant source of credit from the view of number of loans. Their loans have been small, however; the average loan extended by them usually was less than the average extended by insurance companies and other lending agencies. In Texas, individuals extended credit in more than 50 percent of the mortgaged transactions in 1953, but the dollar volume of their loans was well below the dollar volume of credit handled by insurance companies. Nevertheless, individuals as creditors, played a major role in the land market because many sales apparently depended upon the sellers’ willingness to extend credit in transactions when other lend- ers were not available or the buyer could not meet the loan requirements. Although commercial banks held smaller amounts of outstanding mortgage indebtedness than insurance companies and individuals in these years, their relative position has gained since 1946. In Texas and Oklahoma, mortgage debt held by banks by the end of 1953 was less than 7 percent of the total mortgage debt. It ranged from 10 to a little more than 20 percent for the other three states. Commercial banks have been more important lenders in Louisiana than in any other state. While not generally active in the overall land mortgage picture, commercial banks and with private lenders furnished about half of the land mortgage credit in this State. Terms of Mortgages Terms for mortgage credit were closely related to the type of creditor. For the most part, mortgage terms of individual lenders, including sellers, and commercial banks were similar. The repayment period was short and interest rates were 6 percent or more. Mortgage credit extended by individual sellers in 1953 in Texas averaged slightly over 5 years for the repayment period. Mortgages held by commercial banks averaged slightly less than 5 years. In most states, banking laws do not permit long-term mortgage loans, or the type considered more adapted to land mort- gage credit. Individuals made larger loans in relation to the purchase price than did commercial banks—70 percent as compared with only 55 percent for banks. Terms of mortgages held by insurance com- panies Were more favorable for orderly retiring of indebtedness than mortgages held by individ- uals and commercial banks. The average period of repayment of insurance company mortgages in Texas was 12 years. Many insurance company loans were for 15 or 20-year periods. The interest rate commonly charged by insurance firms was 4% or 5 percent. Most of the loans extended by these lenders carried a prepayment provision, while those held by individuals usually did not have such provisions. l0 Mortgage terms of the federal land ban __ were the most favorable of the usual sources I credit from the standpoint of repayment sions and interest rates. However, this agen Q in recent years has not been an important sour of credit to finance farm purchases. BUYERS AND SELLERS The types of buyers and sellers often expl i a great deal about the land market and : ‘ reflect tenure trends. If owner-operatorship the goal of most buyers, the concern would whether farm units purchased are of the size productivity to furnish an adequate income f operations, living and debt retirement. If n‘ farmers are the chief buyers, the concern wo i be the relationship of that fact to the long- tenure goal of owner-operatorship and the for improved rental arrangements. An incr number of nonfarmer buyers, or a high level-z nonfarmer activity in the market, usuallyi, evidence of speculative buying, or of invest Y i funds seeking an outlet. 1*‘ Buyers In the Southwestern states the demand A of the land market was strongly influenced y; farmer buyers during 1946-53. From the staf point of the commonly accepted tenure goal , ownership of the land by those who till it, this a healthy market. However, some farmer buy may have been purchasing units too small ‘if efficient operation, or may have been jeopardi p their land investment by going too deeply in d under unsatisfactory mortgage terms. Ten_ bought heavily in the first 3 years of the pe After 1948, tenants bought less land, gradu, becoming less important through 1953. Howe in 1953, they showed an increase in Louisiana g Mississippi (Table 9). " Owner-operators usually were the lar group of buyers during the early years of’, period. Some exceptions totthis were noted. Arkansas, nonfarmer buyers were the mostf portant group in 6 of the 9 years. Most of nonfarmer buying was concentrated in the 0 f‘ Upland area, where nonresidents purchased dential and small units at a fairly heavy’? In 1953 more than half of the buyers in Arka were not residents of the county or of the ad ing county in which the land was located. _, resales among these buyers were numerous, F ing further to the volume of buying among farmers. In 1951 and 1952, following the Kf outbreak, a strong demand for land developed? nonfarmers became more active in all states; replaced, in some instances, owner-operato the largest gro-up of buyers. However, I tenant and owner-operators are combined, ers were the most important buyers in n all years, including the latter years of the The active participation of farmers in? land market reflected the need for adjustme - size of farms toward more efficient units. Much of the buying of owner-operators was of tracts or separatefields t0 round out an operating unit. ~ At the same time, many tenants bought tracts t0 land to become part-owners. i adjustment through land buying. »_~..-._.--_..e__ ..kfqi.‘j_,,v. .- ‘a, be used as headquarters while renting additional The ownership pattern of most of the farm land area of these states is one of relatively numerous small tracts, which is well adapted to this type of farm unit Often farm owners paid a relatively high price for a tract to add to or round out an operating unit. Nonfarmer buying tended to be heavier in certain areas and localities. In counties adjacent to such cities as Dallas and New Orleans, most farm land was purchased by nonfarmers to hold for urban and industrial subdivisions, or as an investment. As early as the beginning of 1947 about 70 percent of the farm land in Dallas county, Texas, was in the hands of urban or nonfarmer owners} Orleans and other parishes surrounding the city of New Orleans, Louisiana, grew so rapidly that most farm land was converted to higher uses for industry and subdivision. Areas surrounding other population centers in the var- ious states have had the same experience to some ‘degree. In many cases, city boundary limits have ‘ been extended to include several square miles of what has been farm land. The Gulf Coast area of Texas, Louisiana and Mississippi particularly have been affected by nonfarmer buying. Other areas, such as the Blackland Prairie of Texas, have continued to be desirable investments for ' *nonfarm funds, and buying by nonfarmers in such -...,,,w-._-.. M, areas remained high in all years of this period. In this type of land market, prices often are t pushed so high that farmers cannot compete with the buyer who has other sources of income and investment capital. Sellers Almost 57 percent of all landowners in the region in 1946 were farmers? The proportion was above 70 percent in Arkansas and Louisiana. As a result, it could be expected that farmers, if they were not already, would become the chief sellers of land in any period of active land sales. Such has been the situation in all states since 1946 (Table 9). While farmers continued as active buyers they also were the chief sellers in the market. In Arkansas and Mississippi, selling by farmers was relatively high, more than two- thirds of total sellers in all years. In the other three states, farmer owners made up nearly two- thirds of all sellers. Just prior to this period, or from 1940 to 1945, loan companies and lending agencies were active sellers, disposing of most of their holdings acquired in the 1930’s through foreclosure. Few ‘The Price of Texas Farm and Ranch Lands, 1920-1945, Texas Agricultural Experiment Station Bulletin 688, College Station, Texas, April 1947. l. zOwnership of Farmland in the Southwest, Arkansas Agri- cultural Experiment Station Bulletin 502, Fayetteville, Arkansas, December 1950. Table 9. Types of buyers and sellers, Southwestern States. 1946-53‘ state Type of buyer Type of seller and Owner- Non- year? Tenant operator farmer Farmer Estate Others“ — - — — — Percent — — — — -- — Arkansas 1946 35 25 40 67 6 27 1947 31 31 38 72 7 21 1948 22 39 39 80 10 10 1949 27 33 40 77 7 16 1950‘ 51 20 37 43 72 12 16 1952 17 37 46 70 8 22 1953 15 33 52 68 7 25 Louisiana .. 17 36 47 61 14 25 1947 36 46 18 68 17 15 1948 29 42 29 67 ll 22 1949 22 42 36 61 14 25 1950* 1951 14 37 49 62 20 18 1952 8 33 59 64 15 21 1953 24 38 38 68 13 19 Mississippi 1946 44 28 28 12 17 1947 40 37 23 62 17 21 1948 40 38 22 71 13 16 1949 33 37 30 69 15 16 1950*‘ 1951 53 31 72 13 15 1952 47 35 13 16 1953 25 43 32 81 7 12 Oklahoma 194 31 37 32 53 18 29 1947 26 46 28 60 13 27 1948 33 31 68 18 14 1949 31 34 35 60 16 24 1950‘ 1951 24 40 36 68 14 18 1952 15 35 58 24 18 1953 19 45 36 68 16 16 Texas 46 29 35 36 63 16 21 1947 30 36 34 62 16 22 1948 25 42 33 67 16 17 1949 28 33 39 65 18 17 1950* 1951 24 39 37 66 13 21 1952 20 33 47 66 16 18 1953 21 36 43 62 18 20 1 égggultural Research Service. Production Economics Research Branch, 2 Year beginning March _ “Includes sales by lending agencies, public agencies. but made up chiefly of nonfarmer individuals. * Data for 1950 not available. sales were made after 1946 by such sellers. Retir- ing farmers were an important type of seller in all states in most years. Increasing land values made sales more attractive to this type of seller, as also was the case with estates. The latter type of seller was particularly active in all states except Arkansas. It is probable that some post- ponement of estate settlement had occurred while land prices were low. Rising land prices later encouraged estate settlement. “Other” sellers were primarily nonfarmer individuals. Sales by this group usually were second in importanceonly to sales by farmers. Some slackening of sales by these nonfarmer individuals was evident by 1953. This was a reflection of the steady rate at which farmers had been acquiring land. Through this process nonfarmer owners have become fewer in number, and thus automatically they play a less important role as sellers. SUMMARY OF THE REAL ESTATE SITUATION The value of farm land increased to all-time highs in all states, rising on the average about 50 percent in each state. The rise in land values was halted by falling agricultural prices in 1948 and 1949. After the Korean outbreak in 1950, land values again started climbing and eased off only 11 in 1953 after commodity prices, especially live- stock prices, had weakened. The number of voluntary sales was relatively high in 1946, but had declined by nearly a half, except in Mississippi, by the end of 1953. High agricultural income was the chief single factor stimulating land market activity and values. General land market activity did not indicate a “land boom.” There was little evidence of speculation by nonfarmers in bonafide farm land. Credit sales increased in all states so that by 1953 considerably more than half of all transfers involved mortgage credit. The proportion was well above 60 percent in Arkansas and Texas. The federal land banks gradually became less important as a source of credit to finance land purchases. They were lending primarily for re- financing and for farm improvements. Purchase lending by life insurance companies was expand- ed. In 1953, these companies were the chief source of mortgage credit in every state except Louisiana and Mississippi. From the standpoint of number of loans, individuals were about the most important type of lender. Average size of loans by individuals was small, however; they ranked third in dollar volume of credit extended. Special land credit programs for veterans were active in Texas and Mississippi. The Texas program became an important factor in the State land market. Average indebtedness on mortgaged transactions was high throughout the period. Indebtedness was between 60 and 70 percent of the purchase price in Mississippi and Louisiana in nearly all years, running slightly lower in the remaining states. Farmers were the chief buyers and sellers of land. Farm tenants were active buyers, espe- cially in the early years of the period. Some Interpretations and Emerging Problems The foregoing features in the region-wide land market hold certain implications for land- owners and for agriculture in general. Farmers own more of the agricultural land than ever before in the history of the region. The widely-held goal of ownership of farm land by those who till it probably is nearer realization than at any time since these states were settled. The land market will be influenced signifi- cantly by national and international developments during the next few years. For the immediate future, trends indicate a downward adjustment in agricultural income. Although this adjustment may be small, it probably-will result in a period of decreasing land market activity and some decrease in the market value of land. The increase in land values to present levels has raised significantly the capital requirements for agriculture. Generally, an adequate farm unit today is valued at three to four times its market value in 1941. This increased amount poses special problems in accumulating the necess capital required for a down payment. Si amounts may encourage some farmers to purch _ units that are too small for efficient operatio or to buy in low-productive areas where th money will cover a larger acreage. Entrance young operators and farm tenants into agric ture may be restricted except in cases where s stantial family aid or farm credit is available.‘ Many buyers who purchased units with sm down payments in the early years of the 1946- period have paid off or reduced their mortg obligations to manageable proportions. The a cent purchaser who paid only a small amo down may be in a vulnerable position if the pri _ he receives adjust downward while his costs, production remain disproportionately high. T consequence of this situation may be that so buyers will face foreclosure by creditors. T prospective farmer buyer of land should greater caution now in obtaining and usi mortgage credit. mortgage terms that are as favorable as possib and he should estimate prospective incomes car = fully. A continuing adjustment in agricultu prices and incomes may mean that credito should decide whether to introduce some fle bility into conventional mortgage contracts. is likely that federal land banks and life insuran companies, if they so desire, will be in position introduce more flexibility in the form of de adjustment, variable repayment or refinancing ‘ meet any problems of mortgage repayment. Cor. mercial banks and private individuals may ha greater difficulty in introducing changes current mortgage agreement. Much of the land market process reflected trend toward greater agricultural efficien which could be gained by increasing the la ' resource. Buying of many tracts was for t purpose of adding-to operating farm units. T l has meant a.continuing reduction in the numb of farms and farmers, a greater production 0 worker of those left on the farm, and finally gradual reduction in the number of farms t will be available in the land market. Farm may now give greater consideration to increasi scale through better management and more " tensive operations on present acreages. With the increasing investment occurring land, as well as in operating capital for a succ ful farm unit, and with that investment conc trated more in the hands of farmers, the probl of transfer of land to the succeeding generati takes on greater importance. Decisions by fa ers now are more complex; they must dec'_ whether to transfer land to a succeeding gene a tion as an operating farm, to divide the among the heirs, to leave transfer to estate se ment or to sell on the open market on retireme Efficiency of agricultural production can influenced greatly by the decisions reached‘.