Texas Land Market Developments, Third Quarter 2002

Texas land markets regained momentum in the third quarter after registering an uncharacteristic dip in the second quarter (see chart). Market dynamics indicate a steady-to-increasing 2002 market with a normal volume of sales. Other than some regional anomalies related to specific short-term influences, land prices in most local markets were on the increase through fall 2002. This is an analysis of the sales reported to the Real Estate Center.

Statewide

• In the first and second quarters, tract size of sold properties increased, leading to lower per-acre prices.
• The size increase led to an uncharacteristic dip in the second quarter per-acre price.
• Third quarter sizes were more typical, restoring higher per-acre prices.
• Recreational demand continues to drive rural land markets.
• Recreational demand is increasing in more remote markets. Buyers appear to be resisting high priced land in traditionally hot markets. They are willing to travel farther for lower priced land.
• Agents report a shortage of good land for sale in most areas.
• Low interest rates continue to attract buyers.
• The following land market areas (LMAs) registered especially strong trends.
  • Increasing prices: (LMA 1, LMA 6, LMA 9, LMA 14 and LMA 15. See map.)
    • Increasing prices in the Panhandle–North (LMA 1) resulted from a short supply of desirable land for recreational buyers.
    • Speculative purchases of land to acquire water rights also contributed to the upward trend.
    • With a 40 percent increase in prices, Panhandle–North ranked as one of the hottest markets in Texas.
    • The quest for quail hunting retreats drove much of the activity in Panhandle–North and Rolling Plains–North (LMA 6).
    • A short supply of and high demand for rangeland contributed to price increases in Edwards Plateau–West (LMA 9).
    • Buyers are resisting high prices in Kerrville (LMA 17) and Fredericksburg (LMA 16) regions, preferring to trade off increased travel time for cheaper land prices.
    • Prices rose throughout the Hill Country–North (LMA 14), but sales volume lagged.
    • Both prices and sales volumes in Hill Country–West (LMA 15) rose dramatically.
  • Weaker prices (LMA 12, LMA 23 and LMA 30)
    • North Central Plains (LMA 12):
      • Sales of unusually large properties contributed to a decline in median per-acre price.
      • Large acreage sales resulted from the sale of ranches held by the same owners for a number of years.
      • Despite the decline in median price, observers indicate a solid underlying market.
    • Fort Worth Prairie (LMA 23):
      • Weakness in this area stems from anticipated annexations by the City of Fort Worth. The resulting uncertainty has had a chilling effect on land markets. This effect should be temporary, easing when plans become more certain.
      • Recreation purchases remain strong in Parker and Wise Counties.
    • Piney Woods–North (LMA 30):
      • Price deterioration in this area results from poor economic conditions in the timber business.
      • Despite lower timber contributions to prices, the underlying land value has reportedly increased.
      • Excess supplies of large acreages offered by major timber companies have contributed to the decline in price per acre.
      • Large tract buyers are cutting them into smaller tracts for resale.
      • The decline carried over into Louisiana.