The scenic appeal of the Hill Country is responsible for the high prices stretching westward from Austin through Fredericksburg to Kerrville. The lowest priced land is in West Texas from Amarillo through the Trans-Pecos area to the Rio Grande.
The highest percentage price gains were in a strip from San Antonio through Gonzales to the coastal bend. The second highest percentage price jumps were from the Stephenville region through Wichita Falls, Lake Texoma, to Texarkana. The South Texas brush country also posted large price increases. Much of the remainder of the state saw sizable escalation of prices with only the Highland Lakes, Trans-Pecos and Muleshoe areas cooling in 2005 following their hot markets in 2004.
Market anomalies accounted for the only regions exhibiting lower prices and did not signal a general weakening market wide trend. Those regions will likely rebound in 2006.
Forces propelling prices upward accelerated in 2006, pushing markets even higher. Investors seem to be anticipating inflation and plowing funds into tangible assets like land.
Despite high energy price levels, recession does not appear to be on the immediate horizon, and the economy continues to thrive. Higher incomes support the demand for recreational property.
Buyers buy now to avoid being priced out of the market as increasing demand drives prices up. These circumstances have led market participants to repeatedly note a dearth of quality listings and long lists of potential buyers.
Troubling market influences include high energy prices and rising interest rates. At some point, continued high oil prices will sabotage economic activity. However, they have not derailed the recovery yet. Further interest rate hikes may take a toll.
Farm policy is in complete disarray so no one can realistically predict operating conditions for farmers in the near future. And drought stalks Texas, weakening both farming and ranching. Despite these potential problems, current activity suggests that by 2007, land prices should post another sizable increase.
The complete technical report, Texas Land Market Developments - 2005, is available from the Real Estate Center at Texas A&M University. © 2006. Real Estate Center at Texas A&M University. All rights reserved.
