What to Watch for in Texas Land Markets

What to Watch for in

Experts in various fields impacting land markets shared their insights at the Texas Real Estate Research Center’s 31st Annual Outlook for Texas Land Markets conference in April. Here are some highlights.

Economy

“Are we going to have a recession? There’s a 33 percent probability of a recession coming in the next 12 to 18 months. Can we avoid it? Yes.”

“It is quite possible that we’ll see a resurgence of stimulus payments and money being piped back into the government to minimize the impact and severity of whatever recession might come.”

DR. JAMES GAINES former chief economist, Texas Real Estate Research Center

Energy Usage

According to 4Q2021 Clean Power Quarterly data, Texas is the leader in wind and solar power generation. [Regarding ERCOT] ”Overall I think the future is bright, with the key challenge being the need to focus on enhancing grid resiliency to severe events.” The electric load is likely to increase with one major driver being the electrifi cation of transportation.

DR. THOMAS OVERBYE professor, Dept. of Electrical & Computer Engineering, Texas A&M University

“If you look at the amount of money that was spent on energy in terms of oil and gas development, infrastructure development for oil and gas, we’re almost seeing a one-quarter haircut that’s gone straight over into developing green resources.”

DR. DETLEF HALLERMANN clinical associate professor and director of the Reliant Energy Trade Center, Texas A&M University

Land Markets

Land prices, infl ation, COVID-19, labor and resources shortages, and potential droughts are major headwinds for Texas’ land markets this year.

DR. CHARLES GILLILAND research economist, Texas Real Estate Research Center

“People want to move to the small towns . . . if they can work remotely. So that’s driving up demand out in the country.”

DR. JAMES GAINES former chief economist, Texas Real Estate Research Center

Texas Land Markets

Legal Matters

What land is “jurisdictional” under WOTUS (and thus may be subject to federal regulation) is still uncertain and likely to remain so for the foreseeable future. Market disruptors continue to challenge some business practices under antitrust laws. These cases are highly fact intensive, and courts vary on where to draw the line between good competitive business and anticompetitive conduct. Texas Central Railway, which intends to build high-speed electric rail between Dallas and Houston, received a favorable holding from an appeals court regarding its eminent domain power. The case will be reviewed by the Supreme Court. Even if the company wins the case, it still has a ways to go to complete the project.

RUSTY ADAMS research attorney, Texas Real Estate Research Center

State Growth

The state’s population is projected to grow from 29 million now to almost 34 million by 2040.

DR. RONALD KAISER professor, Water Management & Hydrologic Science, Texas A&M University

Continuing changes to Texas’ climate and a growing population will impact water, energy, health, food, economy, and social equity. “This is going to be a real challenge for how resilient Texas is.”

DR. JAY BANNER F.M. Bullard Professor, Department of Geological Sciences, University of Texas

Water Management

“We have plenty of water. The bad news: it’s getting increasingly expensive.” Texas has $8 billion to spend on water projects. Water use will increase from about 16-17 million acre-feet (MAF) today to 19 MAF by 2040.

DR. RONALD KAISER professor, Water Management & Hydrologic Science, Texas A&M University

Tax Issues

There is a declining risk of tax changes in Congress of any material kind for the remainder of 2022. For 2023 and 2024, Republicans are likely to control the House of Representatives and possibly the Senate, which will diminish the likelihood of tax changes unfavorable to real estate owners and investors.