Texas Land Market Latest Developments, Third Quarter 2024

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About this Report

The Texas Land Market Latest Developments report contains an analysis of Texas land markets. The reported sales consist of a sample of verified transactions through third quarter 2024. The report does not include all Texas land sales. The statistics reflect a mixture of land uses and conditions and represent the market for large rural land tracts (the minimum land size is region-specific due to the varied tract sizes sold in each region). Statistics in the report reflect general trends without regard to land use or type. The analysis reports quarterly, annualized changes using moving averages as they generally minimize noisy, short-term fluctuations and provide a long-term indication of market trends. Reported values are based on median prices because they are the most stable representation of market conditions.

Users should regard the statistics presented here as indicators of past market conditions providing a general guide to land market trends. The reported data do not represent prices or values of any particular farm or ranch. Users should not consider the reported statistics as a substitute for an appraisal or market study of current local sales regarding the value of any particular farm or ranch.

For historical data on Texas’ Land Market Areas and data for Louisiana, Mississippi, and Alabama, go to trerc.tamu.edu/rural-land. This page also includes a link to Texas Rural Land Value Trends, a regional analysis of Texas markets by the Texas Chapter of the American Society of Farm Managers and Rural Appraisers.

Texas

The Texas rural land market appears to be in flux and in search of a new direction. Annualized statewide price change continues to moderate, sitting at $4,737, up 2.36 percent year-over-year (YOY) through the third quarter. While this rate of change may appear to indicate stabilization, there are issues worthy of discussion. First, market activity is still depressed (well below 2019 levels), and annualized total sales continued to decline, down 5.01 percent YOY. Secondly, YOY price growth varied widely by region and was heavily influenced by recent sales price strength in Regions 1, 2, and 4, but it is worth noting that Regions 1 and 4 experienced substantial drops in total acres sold. This is indicative of a market in which quality tracts are selling at higher prices while less attractive tracts are sitting on the market longer.

The real (deflated) price per acre eked out a slight gain of 0.15 percent YOY. The five-year compound annual growth rate (CAGR) through 3Q2024 slipped just below 10 percent for the first time since 1Q2022 to 9.92 percent.

As noted, annual sales volume slipped 5.01 percent to 3,453 through 3Q2024. Quarter-only sales volume dropped 12.68 percent, more than double the total annual rate. There were 852 sales in 3Q2023 and 744 in 3Q2024, but the 3Q2024 number may yet be revised higher. The continued cooldown in sales is obvious, but the rate of decline is slowing.

The typical size expanded 36.57 percent to 1,960 acres. The typical size was pushed up by large tracts in Regions 1, 2, and 4. Total acres sold statewide was up 8.52 percent at 298,809 acres. For the first time since 2022, total acres sold was positive in four of seven regions. Region 1 was down the most, and Regions 4 and 6 continued their decline. Statewide total dollar volume rose 11.1 percent over the prior annualized total to $1.42 billion.

Comparing year-to-date sales from 3Q2023 to 3Q2024, of the 33 Land Market Areas (LMAs), the typical size overall was up 9 percent YOY to 127 acres. There was slight improvement in the mix of price changes across the LMAs. The median change was plus 2 percent YOY, and 19 LMAs had positive price changes. Additionally, only four LMAs showed a statistically verifiable trend in price and they were all positive changes. Nonetheless, the mixture of results with few statistically significant shifts suggests a market searching for a sustainable price trend.

Summary and Outlook

Regional prices were higher YOY in four out of seven regions and essentially flat in one of the other three. Additionally, volume (total acres sold) was up YOY in four regions. Nonetheless, Regions 1 and 4 simultaneously experienced strong median price gains and the largest declines in total acres sold. This is indicative of a market in which quality tracts are selling at higher prices while less attractive tracts are sitting on the market longer. These price and volume dynamics indicate an unsettled market through the third quarter. Consistent feedback from market participants indicates the following commonality: many sellers are expecting prices that would indicate a rate of appreciation that no longer exists, at least not broadly, and this has likely depressed sales volume. Likewise, with the low volume of total sales, current market prices appear to be propped up by a relatively small number of well-off buyers securing premium properties.

Combining the metrics with recent anecdotal evidence from market participants, it seems the rural land markets may be at an inflection point. Overall, rural land markets have stabilized such that the magnitude of YOY changes has moderated from the drastic levels of change seen in 2023 and the first quarter of this year. The last three years have been a wild ride for rural land market participants, but the wild swings appear to be over.

TRERC’s Texas rural land forecast is still predicting small declines in statewide price beginning in the next quarter or two, and a slight increase in the volume of acres sold beginning early next year. For this to happen, seller sentiment will need to change. In other words, it is likely that sellers will reduce their price expectations, attracting new buyers who may also be encouraged by lower interest rates. Additionally, many would-be buyers, fearful of the election and its potential aftermath, held off purchases. Those buyers may now be prepared to act.

It will be interesting to see the effect coming changes in federal economic policies (regulations, taxation, and government spending) will have on overall economic activity and the posture of market participants. At the very least, the election being over removes a great deal of the kind of uncertainty that typically stifles market activity.

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Previous reports available with data from:

2024:2Q