Texas on the surface: oil booms & land pricesTexas on the surface: oil booms & land priceshttps://www.recenter.tamu.edu/news/newstalk-texas/?Item=24432014-11-17T10:32:00Z2014-11-17T07:00:00Z

TEXAS - Texas rural land prices have been cruising higher, following the path of crude oil. In 2013, the average price per acre reached $2,160, up 9 percent from 2012.

So far in 2014, land is selling around $2,354 per acre, up another 9 percent, according to the Real Estate Center at Texas A&M University.

“Technically, it’s called a co-movement,” said Charles Gilliland, research economist at the Real Estate Center. “Land prices seem to follow the trends in oil prices.”

The Texas economy does well in general when oil prices rise, and people who work in the oil industry have more money to spend — often on ranches.

The economic impact of the oil boom in South Texas has erased any negative effect on land prices that the state’s severe drought might have otherwise caused, said Ranch broker Mark Hubbard.

South Texas land prices are averaging around $3,000 per acre, but selling sometimes at $3,500 to $4,000 an acre. People are “buying the property next to them for $4,000 per acre. Surface only,” said Richard Dockery, a real estate broker and appraiser in Three Rivers.

Mineral ownership can be severed from surface ownership in Texas, and sellers of South Texas land are particularly unwilling to part with their minerals.

Ranches on the fringes of the Eagle Ford and “out of the fairway” were in demand, but those for sale in the heart of the field, where industrial activity has taken over, were being met by “market resistance” if minerals weren’t part of the sale, according to a report by the American Society of Farm Managers and Rural Appraisers.

“A ranch sitting in the middle of the Eagle Ford Shale with no minerals is a pretty tough sell,” said Hubbard. “Land outside the Eagle Ford Shale with or without minerals is bringing a premium. There’s a lot of money in the system. There’s a lot of people who want to own land. But there’s a lot of people who are running from the shale.”

Midland Reporter-Telegram
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