Texas Land Market First Half

Market

Texas Land Markets First Half

SECOND QUARTER 2023

REPORT BY CHARLES E. GILLILAND, PH.D. Research Economist, Texas Real Estate Research Center

Responding to the continuing assault on inflation through rising interest rates, Texas land markets have seen transaction volume drop. At 3,915 sales, preliminary reported volume for the first half of 2023 lags 50 percent below the frenzied levels recorded in early 2022. Final reports will likely shave that decline, however it continues the trend set in the first quarter. Preliminary reports of total acreage dropped 66 percent to 303,646 acres. Nevertheless, prices ranged higher, rising 8.58 percent to a record statewide price of $4,659 per acre. However, after adjusting for inflation, that price represents a mere 0.98 percent increase over 2022, the slowest quarterly growth since the third quarter of 2020 during the pandemic. Quarterly volume has declined for seven straight quarters. The preliminary total dollar volume fell to $1.4 billion, a 63 percent drop. Final reports will increase the number of sales and add to the total dollar volume. Nevertheless these large declines in preliminary statistics reveal a substantial cooling of market activity compared to the 2021-2022 frenzied activity.

Panhandle and South Plains

First half markets in this farmland region presided over strong investor demand driving prices up 22 percent to $1,742 per acre. Preliminary reports totaled 56,035 acres down 74 percent from 214,139 in 2022 second quarter. The number of sales dropped 42 percent to 320 sales. Total dollar volume dropped 68 percent to $98 million despite the large price increase.

Far West Texas

Sales in this region have returned to lower prices for large properties. At $491 per acre the price in this region dropped 55 percent below the industrial prices paid by the oil and gas producers in the Permian Basin. Activity was still meager.

West Texas

Sales activity declined 50 percent to 497 sales, with prices rising 15 percent to $2,470 per acre. However, that increase dropped from the 22 percent increase in the first quarter. Total acreage declined 75 percent to 73,978 acres. At $183 million, total dollar volume dropped 71 percent.

Northeast Texas

Volume declined 48 percent to 1,170 sales and prices increased 5 percent to $7,776 per acre. However, that increase lagged behind the 8 percent price increase in the first quarter. Total dollar volume declined 51 percent to $289 million.

Gulf Coast–Brazos Bottom

Volume also dropped in this region, down 48 percent to 532 sales. Prices increased 9 percent to $10,052 per acre. Total dollar volume dropped 56 percent to $208 million.

South Texas

Sales activity south of San Antonio, fell 47 percent to 384 sales. Prices rose 16 percent to $6,028 per acre. However, total dollar volume declined 50 percent to $197 million.

Austin-Waco-Hill Country

Volume of sales dropped 55 percent as buyers shifted from urban areas to the country, with transactions falling to 999 sales. Prices in central Texas topped 2022 prices by 8 percent, rising to $7,161 per acre. However, that increase was down from a 15 percent increase in the first quarter. Total dollar volume declined 67 percent to $330 million.

The Future

Volumes in Texas land markets have receded from the sky-high levels last year. The focus of market activity is concentrated on higher quality properties. Properties are taking longer to sell. However, markets remain active, just not at the free-for-all volumes recorded in 2022.

Source Texas Real Estate Research Center