|Texas Land Market Latest Developments||Texas Land Market Latest Developments||Charles E. Gilliland, Lynn Krebs, and Tian Su||2023-04-21T05:00:00Z||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 through the fourth quarter of 2022. 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.
Annual sales volume slipped 26.3 percent year over year (YOY) to 6,677 in 4Q2022. Quarterly totals dropped from 1,283 in 4Q2021 to 952 in 4Q2022, a 25.8 percent slide. Furthermore, the 4Q2022 volume was 57.4 percent below 4Q2020's volume. This was the lowest fourth quarter volume since 2015 (973). Clearly, activity has slowed.
Fourth quarter activity confirmed the trends seen in the third quarter. Sales volumes slowed significantly while prices continued to rise, although at a more modest pace than last year. Reported demand for land reflected by rural brokers has noticeably cooled from last year's frenzied contest for land. Still, prices increased 12.4 percent to $4,446 per acre statewide. However, that pace dipped below the remarkable 27.2 percent posted in the first quarter of 2022, 23.9 percent in the second quarter, and 19.1 percent in the third. Total dollar volume of $3.2 billion declined by 4.4 percent over the 2021 total, down from a 9.1 percent increase in 3Q2022. Market activity is clearly trending down over recent quarters, and it is no longer well above pre-pandemic averages, though prices continue to trend upward.
A total of 719,738 acres sold in 2022, down 15 percent from 2021. These results suggest market activity has fallen to a more normal level at high prices. The typical size expanded 7.7 percent YOY to 1,406 acres.
Regional prices continued to increase by double-digit percentages except in Far West Texas, where prices continued to fall. However, the four eastern regions (4, 5, 6, and 7) saw total acres sold decline by more than 30 percent. All but Far West Texas had double-digit percentage declines in the number of sales. This trend to rising prices and declining activity suggests market demand is declining. If so, brokers may begin to find ebbing enthusiasm among potential buyers.
The separate report Trends in Large Property Rural Land Markets Through 4th Quarter 2021-2022, comparing year-to-date sales for each year, indicates price gains statewide with the quarterly median up 25 percent. The report also confirms the decline in volume with 2022 falling 26 percent below 2021. The typical size by acres per sale remained fairly steady at 122 acres, down just 2 percent from 2021.
Prices continued to rise in every region of Texas, except Far West Texas, through fourth quarter 2022. However, sales volumes slowed across the state. Regions 6 and 7 saw the largest price gains (over 20 percent) in spite of sales volumes declining by as much or more than the other regions, except Region 2. Overall, these trends suggest continued cooling of the insatiable demand that has propelled prices and activity to record levels. Brokers reported a reduction in inventory and activity. In addition, they see a slackening of demand in many areas. These conditions point to continued quick sales of good properties and price reductions or delisting of less desirable properties.
While there have been some signs that inflation is coming down, it continues to plague the economy. The Federal Reserve's continued interest rate hikes have impacted housing markets and will have negative effects on land market prices and volumes. The Ukraine/Russia war drags on continuing to threaten food supplies. Many economists see a recession in the near future. In general, a pall of uncertainty smothers markets for all assets in the fourth quarter. However, such conditions often favor investments in land.
To read the report in its entirety (including maps, figures, and tables for each Texas region), click Download PDF.
|Digital and Print||2268||https://www.recenter.tamu.edu/articles/research-article/TexasLandMarket-2268|| https://assets.recenter.tamu.edu/Documents/Articles/2268.pdf|