Texas LAND Summer 2022

Land Market Continues to Soar!

FIRST QUARTER 2022

BY CHARLES E. GILLILAND PH.D.

Research Economist Real Estate Center, Texas A&M University

The first quarter of 2022 saw annual sales volume slip -10.90 percent to 7,880 for the four-quarters from 2021 to 2022. Comparing quarterly volumes for the first quarter of 2022 to 2021, quarter only totals dropped from 2,829 in 2021 to 1,664 in 2022, a 41.39 percent slide. However, the 2021 first-quarter total was a 69.09 percent increase over the 2020 volume. This marks the second straight quarter that the number of sales failed to match or exceed the volume for the previous year. Clearly, activity appears to be slowing down. Nevertheless, the 2022 quarter only volume topped 2019 totals by 9.40 percent.

A continued feverish demand for land evidenced by the legions of would-be buyers contacting brokers, coupled with an absence of available properties for sale, pushed prices up by a remarkable 27.12 percent to $4,116 per acre statewide. Total dollar volume reached a record $3.868 billion, closing up 76.79 percent over the 2021 first quarter. However, that represents a slide from the 97.61 percent increase recorded in the fourth quarter of 2021.

A record 939,791 acres changed hands, up 39.08 percent over 2021. These results suggest that the frenzied market of the past two years may be returning to a more muted level of activity at high prices. The typical size expanded 24.43 percent to 1,305 acres.

Excepting Far West Texas, where prices slipped slightly, all other regions posted double-digit price increases. In addition, all regions except for Northeast Texas saw increases in total acres transferred. The explosion in annualized sales volume continues to top totals from 2021.

1. Panhandle and South Plains The number of sales increased 3.09 percent while prices grew 19.82percent to $1,342 per acre. Total acres sold grew 67.74 percent to 221.045 acres while dollar volume doubled, up 100.99 percent to $296.6 million.

2. Far West Texas Although rising oil prices have inspired an uptick in the oil-related operations, the expansion has not prompted buyers to flood into this market, where only 27 total sales represented a 13.18 percent increase from 2021 levels. Total acreage expanded by 39.53 percent to 43,897 acres. Prices slipped slightly, dropping 1.89 percent to $1,400 per acre. Few sales at historically very high prices make it difficult to establish reliable market-wide pricing information.

3. West Texas Sales activity declined 11.55 percent to 957 sales but with a 17.27 percent price increase to $2,003 per acre. Total acreage sold rose 69.65 percent to299,357 acres. At $599.6 million total dollar volume soared 98.95 percent over 2021 levels. Strong demand fueled higher prices.

4. Northeast Texas Volume of sales declined 16.22 percent declined 0.45 percent to 91,677 acres. Rising prices drove total dollar volume up 29.64 percent to $641.8 million. Markets reflect fewer transactions in this region.

5. Gulf Coast–Brazos Bottom The volume of sales barely changed, dropping 1.36 percent from 2021, with total acres sold increasing 27.01 percent. Prices increased a substantial 24.95 percent to $8,863 per acre. The high price and expanded total acreage produced a 58.71 percent increase in total dollar volume to $468.5 million.

6. South Texas Sales activity remained flat in the while prices increased 30.23 percent to $7,001 per acre. Total acreage region south of San Antonio, where 85,215 acres comprised a 27.20 percent increase over 2021 totals. Prices grew 23.93 percent to $4,925 per acre. At a 0.27 percent increase, the number of sales totaled 730. This activity drove total dollar volume up 57.63 percent to $419.7 million.

7. Austin-Waco-Hill Country Prices in central Texas topped 2021 prices by 44.97 percent, rising to $6,341 per acre. In addition, dollar volume mushroomed up 56.11 percent to $924.1 million. The region saw a 7.69 percent expansion in total acres sold to 145,735 acres.

The Future. The explosion in the volume of transactions in rural property may be slowing as prospective buyers find few properties for sale. Investors, a throng of buyers motivated by the desire to own rural retreats, and farmers and ranchers continue to compete for available properties.

Many observers fear that market activity at these levels cannot last, and some brokers indicate that their phones are not ringing as often as they have been. However, the phones are still ringing. Thus, nothing on the horizon points to a slackening in demand for the Texas countryside. The coming months will likely see a continuing scramble for land with increasing upward pressure on prices.°

Source Real Estate Center, Texas A&M University