It’s déjà vu all over again in Texas land markets. Statewide prices in the first half of 2013 increased a remarkable 8 percent over 2012 prices.
Contributing to this trend, prices in many local land markets soared to rates seen in the 2004-05 heyday. Regional prices in South Texas and the Austin-Waco-Hill Country region of Central Texas bucked the trend and drifted slightly lower after strong increases in 2012.
The statewide price of $2,479 per acre compared with the 2012 year-end price of $2,295 per acre, marked an extremely strong uptick for the first half of 2013. However, the market continued to focus on small properties for the most part.
The inflation-adjusted price of $437 per acre in 1966 dollars eclipsed the 2008 record of $425 per acre by a sizable margin. By any measure, statewide land prices have reached their highest levels ever.
Small-sized transactions continue to dominate in the overall market, reducing the 2013 median to 68 acres from 77 acres in 2012. In the South Texas market, however, the Lower Rio Grande Valley reported that sales nearly doubled in acreage, indicating more sizable transactions there than in previous years. That move to larger properties may have contributed to the weakened price trend in the South Texas region.
These results indicate that Texas land markets have accelerated the rising trend established in 2012 to price growth similar to 2004-05 markets. Pent-up demand has finally begun to push prices higher. Observers report that recreational users have reappeared, driving up prices for rangeland despite challenges presented by drought.
Mid-year economic activity suggests that the boost in prices and probably volume of sales will persist into the fall and winter. Anecdotal reports from the field suggest that activity has in-creased noticeably in nearly all parts of Texas.
Continuing activity in the Eagle Ford shale play as well as the emerging Cline shale field in West Texas suggests that future markets may see more demand for existing offerings. These factors suggest rising prices and the potential for sales of larger properties as the year unfolds.
Two potentially troubling situations could threaten this optimistic outlook. The drought stran-gling much of the nation continues to plague some areas. West and South Texas are particularly dry. Lack of moisture could hamper any recovery. In addition, observers are becoming nervous over movement in interest rates.
If long-term rates move higher, land markets may falter. Despite these potential stumbling blocks, 2013 land markets have moved into positive territory.
View Texas Rural Land Value Trends for 2012.
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