|Texas Land Markets, Third Quarter 2017||Texas Land Markets, Third Quarter 2017||Charles E. Gilliland and Tian Su||2017-11-16T06:00:00Z||tierra-grande||Land Markets|
In third quarter 2017, Texas land markets recorded the lowest year-over-year price increases since fourth quarter 2015.
Texas land markets seemed headed for a breather in the third quarter after rebounding for the three preceding quarters. While the trend continued upward, the 1.78 percent statewide gain marked the lowest year-over-year price increase since fourth quarter 2015. The muted expansion confirmed much slower Texas rural land price appreciation compared with 2013–15 levels. The 5,766 transactions represented an active market compared with totals in past third quarters. The price settled at $2,575 per acre, well ahead of $2,530 per acre in third quarter 2016 and virtually matched the second quarter 2017 price of $2,574 per acre.
Overall, Texas land markets continued to grow on an annual basis. However, quarterly prices changed little since the first quarter. In addition, market conditions in various regions diverged, with three regions expanding and four showing emerging weakness.
Regional Market Developments
Panhandle and South Plains
The second quarter market rebound in this region appears to have diminished in the third quarter as prices inched up 1.51 percent in year-over-year comparisons. At $1,140 per acre, the third quarter price fell short of the second quarter of $1,164 per acre. The 369 sales continued the robust pace, exceeding 2016 third quarter sales by 23 percent. Total acres expanded to the largest total since fourth quarter 2014. Dairy farmers' purchases, which contributed to strength earlier in the year, appear to have waned.
Far West Texas
The boom in oil exploration and production continued to drive prices in this region. Some buyers reportedly purchased ranches at high prices to gain access to sand for fracking wells in the drilling boom. Although slightly off second-quarter highs, overall prices continued to exceed those in 2016 by substantial margins. High bonus payments for mineral leases and purchases of land to secure water rights for municipalities put pressure on prices. The region continued to record a low level of activity, which limits the level of confidence in indicated prices.
Price growth in the West Texas region came to a halt in third quarter 2017, retreating 4.40 percent. The price decline coincided with an uptick in activity. The 599 sales exceeded the 566 sales a year earlier. This market gave up all of its 2017 gains, falling below 2016 second-quarter levels. The decline produced a price of $1,391 per acre compared with $1,481 in the first quarter.
Continued strong price growth in Northeast Texas boosted prices 6.59 percent above third quarter 2016. The 1,906 sales were 135 more than 2016. The $3,864 per-acre regional price reached an all-time high. Renewed interest in the Haynesville Shale and robust recreational demand gave this area the strongest performance in Texas.
Gulf Coast–Brazos Bottom
Optimism born in the energy sector propped up markets in this region, reversing price declines with a 1.88 percent increase over third quarter 2016 despite Hurricane Harvey. At $5,679 per acre, sales in the region recovered to early 2016 levels. The sales volume of 674 dropped slightly from third quarter 2016 totals, perhaps reflecting a decline in the wake of Hurricane Harvey. Past flooding events suggest there will likely be a notable decline in activity for several quarters with little impact on prices. However, Harvey's flooding reached unprecedented levels, so this market may face some turbulence.
Land markets in this area posted a solid 4.60 percent price increase during the third quarter, continuing a positive trend that began with fourth quarter 2016. Those increases ended four quarters of declines caused by turmoil in the energy industry. The $3,614 per-acre price coincided with a sizable expansion in activity at 561 sales, an increase of 124. Despite the gain in volume, observers suggest a dearth of properties for sale has contributed to strengthening prices.
The Central Texas market retreat slipped further into negative territory in the third quarter, falling 1.87 percent. This decline continues a five-quarter trend of increasingly smaller price changes. At $3,525 per acre, prices surrendered all of the gains posted in the first and second quarters. Sales volume expanded slightly with 1,637 sales compared with 1,519 in third quarter 2016.
Dr. Gilliland (email@example.com) is a research economist and Su a research assistant with the Real Estate Center at Texas A&M University.
|Digital and Print||2186||https://www.recenter.tamu.edu/articles/tierra-grande/Texas-Land-Markets|| https://assets.recenter.tamu.edu/Documents/Articles/2186.pdf|