Texas Land Market Developments: Third Quarter — 2003

Prices paid for Texas rural land continued to rise strongly through the third quarter compared with price levels in 2002. Recreational buyers and investors inspired the strong performance. Low interest rates and meager returns on other investments continued to work in favor of rural land as a viable alternative investment. Recreational buyers, primarily those seeking places to hunt wildlife, continued to buy land, especially in the Panhandle and West Texas. Those areas have been shielded from the resistance to high prices Hill Country sellers are facing. Buyers in all areas continue to find it difficult to locate suitable properties at affordable prices. As a result, buyers are looking at properties in areas passed over by hunters in the past. These forces have combined to continue remarkable price increases as shown in the following tables.

Statewide Trends

• Prices (as measured by the year-to-date weighted median price per acre) rose 12 percent from $974 per acre through the third quarter of 2002 to $1,092 per acre through the third quarter of 2003.
• All areas with identifiable regionwide price trends posted strong increases.
• The typical size of property sold dropped slightly statewide.
• In two areas (land market areas [LMAs] 6 and 29) strong price pressure in the first two quarters appeared to ease slightly in the third quarter.
• Investment demand continued to drive markets across Texas.
• Recreational demand also figured prominently in the third quarter.
• Recreational demand is on the increase in remote markets as buyers appear to be resisting high priced land in traditionally hot markets. Buyers 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 LMAs registered especially strong trends compared with markets in first half 2002.

LMA 1

• The 2003 median price per acre remains below the 2002 price in this region. As mentioned in the second quarter 2003 report, prices increased dramatically between 2001 and 2002. This apparent drop in 2003 represents an adjustment from that large jump. This region’s dynamics continue to reflect the same forces influencing the remainder of the Panhandle (LMAs 2–6).

LMAs 2 through 4

• Recreational demand for land, a new concept for this region, continues to drive the market in the Panhandle with buyers flocking to the region searching for hunting properties.
• Many recreational buyers have abandoned hunting leases in other regions seeking more control of their hunting venues.
• Brokers continue to face a rising volume of inquiries from quail and deer hunters living in metropolitan areas of Texas.
• Sparked by low returns on alternative investments, some buyers are parking capital in land, adding to the total demand in this region.
• The 2002 Farm Bill eased possible negative pressure on farmland prices.

LMA 7, 9 through 11

• Recreational demand continues to drive this market.
• Individuals with tremendous buying power from the Metroplex, Austin and even Houston are providing the demand for the property.
• Buyers want the land for bird and white-tailed deer hunting.
• The property is being bought in large tracts of two and three thousand acres, divided into smaller tracts and resold. This activity is occurring most frequently in Taylor and Coleman Counties.
• The demand is sufficiently great that there is not enough product to be sold to all the interested parties.
• In anticipation of the coming hunting season, recreational buyers flooded this market to secure their hunting grounds.

LMA 18, 19

• Prices in the Hill Country have spiraled to such high levels that buyers are shifting their focus to overlooked alternatives. Areas where local buyers traditionally populated markets now have competition from outsiders ferreting out hunting properties. Karnes, Live Oak and Bee Counties are seeing prices rise to new highs.
• Anticipation of development resulting from the Toyota plant has had a significant impact on land prices south of San Antonio.
• Bird hunting has emerged as an important influence in this region.

LMA 23

• The overflow of people in the Metroplex has led to an increase in demand for rural land.
• People are moving outward from the cities in an attempt to accommodate the growing population.

LMA 26

• Despite slower activity in Travis and Hayes Counties, the number of sales in Bastrop, Lee, Caldwell, Milam and eastern Williamson Counties has increased.
• Sales in these counties continue to put upward pressure on the median price per acre in this region.

LMA 27

• The desire for recreational land is on the rise in all parts of this area.
• Counties in the southern and eastern part of the region, such as Madison, Grimes and Brazos, have posted increased sales volume and higher prices. This trend stems from an influx of demand from both the Bryan–College Station and Houston areas.
• New owners are transforming the land into high-fence hunting properties and weekend get away retreats.

LMA 28

• People continue to seek out areas free from the problems and pressures of urban living. They are flocking to the countryside in this region, sparking a substantial increase in land prices.