Third quarter 2011 land market activity declined throughout Texas compared to 2010. Renewed interest in cropland, combined with a fear of coming inflation, provided upward pressure on cropland prices. However, for the third straight year, large properties sold less frequently than in past years.

Sales volume continues to lag behind numbers of transactions seen in recent years. Markets continued to post volumes last seen in the 1990—2000 era. These facts reinforce information gathered from appraisers and brokers who report potential buyers are making low offers presuming that prices will eventually drop.

Buyers are still hesitant to pay current prices. Nevertheless, some buyers have grown weary of delaying and have opted to buy good quality properties at today’s price levels.

Without an external shock to the economy, market prices have firmed. However, a glance at the actual acreage transferred in reported sales shows an unusually low number of acres changed hands for the third straight year. These circumstances reflect the general discomfort abroad in the overall economy as the world continues to grapple with the problem of excessive debt in financial markets. These disquieting forces create a heightened apprehension of risk and suggest that buyers will continue to expect price erosion while sellers resist sales at prices below recent historical norms.

Anecdotal evidence suggests that cropland investors continue to actively seek land. However, dismal yields caused by a drought of historic proportions and the threat of substantial changes to government crop supports could lower demand for this land. While these circumstances have not weakened demand for cropland they have muddled prospects in the future.

Rangeland markets face formidable challenges as potential buyers anticipate lower prices and sellers refuse to accept low-priced bids. Transitional tracts near urban areas still face slack de-mand over the coming year. By contrast, bustling activity in the oil patch continues to inject cash into Texas communities. Mineral producers and royalty owners have realized substantial profits with no end in sight. Evidence is beginning to emerge indicating that some of this prosperity has begun to focus on land.

Despite these positive forces, the problems dragging down the economy will likely ensure little change in prices or sales volume for the near future.