|Texas Land Market Latest Developments||Texas Land Market Latest Developments||Charles E. Gilliland and Tian Su||2022-04-11T05:00:00Z||research-article||Land Markets|
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. 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. Median values are also reported, because they are the most stable representation of market conditions at any point.
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; data on Texas' Land Market Areas; and data for Louisiana, Mississippi, and Alabama, go to recenter.tamu.edu/data/rural-land. The link will also direct you 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.
Fourth quarter 2021 saw a continuing surge in annual sales volume posting a four-quarter total of 9,055 sales, a 17.84 percent increase over the 2020 fourth quarter. However, perhaps partly driven by a lack of available properties for sale, the quarterly sales volume for the fourth quarter at 1,283 fell 953 sales short of the 2,236 sales in fourth quarter 2020. Feverish demand for land, coupled with a dearth of listings, pushed prices up by a remarkable 29.05 percent to $3,954 per acre statewide. Total dollar volume reached a record $3.346 billion, closing up 97.61 percent over the 2020 fourth quarter. A record 846,347 acres changed hands, up 53.13 percent. This continues to be the most active period in Texas land market history. The typical size expanded 14.62 percent to 1,305 acres.
All regions posted double-digit price increases. In addition, all regions saw substantial increases in total acres transferred. This explosion in annualized sales volume continues to top totals from 2020. However, the 2021 fourth quarter sales volume dropped 42.62 percent from the 2020 fourth quarter total volume, more closely matching the 1,211 sales in 2019 prior to the pandemic. The declines occurred in all regions except the Panhandle and South Plains.
The separate report
Trends in Large Property Rural Land Markets Through 4th Quarter 2020-2021, comparing year-to-date sales for each year, indicates enormous gains in prices statewide. In addition, 21 of 33 localized Land Market Areas recorded statistically verified marketwide trends to higher prices. The unadjusted median statewide price increased 22 percent from 2020 to 2021. However, the rate of volume increase slowed in fourth quarter 2021. However, the 2020 fourth quarter was remarkably active (up 85 percent over 2019), so a drop in the quarter-only volume is not a big surprise. Besides, the number of total sales for 4Q2021 is not much different from the numbers in 4Q2019 (up about 6 percent) and earlier years. These numbers suggest markets may have returned to a more normal level of activity after an unprecedented period of hyperactivity.
Fourth quarter volume trends indicate a potential flagging of the insatiable demand that has propelled prices and activity into record territory. The falling volume may indicate market participants have begun to object to current high asking prices as fourth quarter only volumes fell well below the same quarter 2020 levels. However, fourth quarter 2020 was active (up 85 percent over 2019), so a drop in quarterly volume does not equate to historical low levels. Besides, brokers report a general lack of inventory for sale. Ultimately, the number of sales don't significantly differ from fourth quarter 2019 numbers (actually up about 6 percent). Those facts suggest markets may have returned to a more normal level of activity.
Nevertheless, the frenzied level of activity fueled land markets throughout Texas, Alabama, and Mississippi in fourth quarter 2021 with prices and total acres rising rapidly in most areas. The reopening of the economy is inspiring a rise in consumer expenditures that will spur further growth in economic activity, pointing to expected increasing demand for rural land. Fears of inflation are driving investors to buy land. Land markets seem to be poised for continued unprecedented expansions as total dollar volume increases in all areas.
Current long-term concerns include the exploding level of debt that the government has sustained in its efforts to prop up economic activity during the pandemic. Research shows high levels of government debt inhibit economic growth. Pent-up demand and a stock of personal savings suggest that inflationary pressures may become entrenched in the economy. Add to that the small supply of workers in an expanding economy inciting potential wage inflation and it would be prudent to anticipate general price growth in the future. The debt issue tends to enhance demand for land as buyers seek a safe haven for capital. Inflation also inspires rising land prices as well. All of this points to rising prices and high volumes of activity in the near future.
However, the Federal Reserve has indicated increases in interest rates and withdrawal of quantitative easing in the year ahead to fight inflation. That activity will negatively impact land markets, but the effect lags approximately four quarters. Therefore the positive momentum should continue throughout 2022.
|Digital and Print||2268||https://www.recenter.tamu.edu/articles/research-article/TexasLandMarket-2268|| https://assets.recenter.tamu.edu/Documents/Articles/2268.pdf|