By David S. Jones, Senior Editor, Real Estate Center
Release No. 25-0810
COLLEGE STATION, Tex. (Real Estate Center) — After years of soaring in the stratosphere, Texas land prices have returned to earth.
“The ongoing recession took its toll on Texas land markets in 2009,” said Dr. Charles Gilliland, research economist for the Real Estate Center at Texas A&M University. “Most rural land markets across the state pitted bargain-seeking buyers against unmotivated sellers. Fearing further financial turmoil and falling land values, bidders made offers well below asking prices.”
Sellers resisted offers lower than the asking price. After all, prices had gone up four straight years. Eventually, however, sellers in need of cash were forced to take sizeable discounts.
“The result was a profound drop in sales volume,” said Gilliland, “and there were fewer large properties being offered.”
Prices in 2009 were influenced by the type of land being sold. Previously strong markets for Texas grazing and recreational properties fell. Meanwhile, prices for cropland remained strong.
“Because pasture and rangeland make up more than 80 percent of Texas land, overall market indicators largely reflect conditions for those land types,” Gilliland said.
The year-end 2009 average price per acre was $2,086 — 7 percent less than the record high of $2,247 established the previous year. The 4,138 total sales transactions were the fewest since 1995. The most sales ever recorded by the Center were 8,005 in 2005.
When it comes to land sales, size matters, too. The average tract sold in 2009 was only 73 acres, a record low. Just a year earlier, the average was 90 acres.
“Large-property sales were scarce,” said Gilliland.”This suggests prospective buyers with ample resources are unwilling to risk losses if prices weaken further.”
Buyers looking for cropland will not find much selection as higher commodity prices increase demand for land to grow them.
“The impasse between buyers and sellers indicates strong differences of opinion regarding the future of Texas land markets,” said Gilliland, who has monitored the state’s rural land for 30 years. “Buyers anticipate falling prices, while sellers are hoping for a turnaround in the near future.”
To learn more, read Gilliland’s article, “Landslide,” in the July issue of Tierra Grande magazine. It is free online at http://recenter.tamu.edu/pdf/1942.pdf.