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Texas Land Markets - 69% increase in 1.25 years?

3,099 Views | 12 Replies | Last: 3 yr ago by Red Pear Realty
BlueHeeler
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5:41p, 6/29/22
AG
According to an article I read by Charles Gilliland (TAMU real estate center), Texas land markets appreciated 30% in 2021 and another 30% in the 1st quarter of 2022. So, that roughly equates to a value increase of 69% in 5 quarters.

Texas Land Markets in Q1 2022 | Land.com

Is this rate of appreciation sustainable or does this bust like the stock market is doing now?
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Red Pear Realty
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6:58p, 6/29/22
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No it's not sustainable. But crazy stuff happens when you print half of the currency that's ever been printed in just a few weeks.

https://fred.stlouisfed.org/series/M2SL

In fact, they printed so much, they changed the way the datapoint is presented just to hide what they did:

https://fred.stlouisfed.org/series/M2

Also, Gilliand was an awesome professor.
Sponsor Message: We Split Commissions. Full Service Agents in Austin, Bryan-College Station, Dallas-Fort Worth, Houston and San Antonio. Red Pear Realty
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Red Pear Luke
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In reply to Red Pear Realty • 4:27a, 6/30/22
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Red Pear Realty said:
No it's not sustainable. But crazy stuff happens when you print half of the currency that's ever been printed in just a few weeks.

https://fred.stlouisfed.org/series/M2SL

In fact, they printed so much, they changed the way the datapoint is presented just to hide what they did:

https://fred.stlouisfed.org/series/M2

Also, Gilliand was an awesome professor.


He taught us the basics of how to get down to the NOI and how to bet on horses at the race track. Was a great course!
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BlueHeeler
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8:43a, 6/30/22
AG
Thanks for the responses. My wife and I have been looking for a rural property (75-125ac) for a few years now. I actually ended up calling our realtor earlier in the week and told him we are out at this point.

In the area where we are looking prices were 11-12K/acre for a tract this size in the 2019 and even 2020 timeframe. Now the average price is 22-24K/acre. It just doesn't make any financial sense anymore. It is all a bit demoralizing.
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txaggie_08
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In reply to BlueHeeler • 9:55a, 6/30/22
AG
It is tough, and the other thing I hate seeing are these land brokers going in, purchasing these ranches around 100-500 acres, and then subdividing them into 10-20 acre tracts. I understand some of that around cities, but this is happening all over Texas. People are buying these 10 acre tracts to get their foothold outside of the city, seemingly not realizing that they're going to end up having tons of neighbors and growing population centers because others are doing the exact same as them.
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BlueHeeler
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10:46a, 6/30/22
AG
Quote:
It is tough, and the other thing I hate seeing are these land brokers going in, purchasing these ranches around 100-500 acres, and then subdividing them into 10-20 acre tracts. I understand some of that around cities, but this is happening all over Texas. People are buying these 10 acre tracts to get their foothold outside of the city, seemingly not realizing that they're going to end up having tons of neighbors and growing population centers because others are doing the exact same as them.
Yeah, we are seeing alot of that in the area we are looking in. The big issue this creating is that in 2019 you could get a better $/acre on a 100 acre tract due to economy of scale. However, with developers coming in and cutting up these larger tracts, they are paying ridiculous prices and buying larger acreage doesn't really save you much anymore.

It's just really amazing what has happened in the last 2 years. The only hope we have at this point is for a recession to bring these prices back down some. Who knows if that will happen, though. Like I said, it's really demoralizing.
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NoahAg
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In reply to BlueHeeler • 2:05p, 6/30/22
Bonfire97 said:
Quote:
It is tough, and the other thing I hate seeing are these land brokers going in, purchasing these ranches around 100-500 acres, and then subdividing them into 10-20 acre tracts. I understand some of that around cities, but this is happening all over Texas. People are buying these 10 acre tracts to get their foothold outside of the city, seemingly not realizing that they're going to end up having tons of neighbors and growing population centers because others are doing the exact same as them.
Yeah, we are seeing alot of that in the area we are looking in. The big issue this creating is that in 2019 you could get a better $/acre on a 100 acre tract due to economy of scale. However, with developers coming in and cutting up these larger tracts, they are paying ridiculous prices and buying larger acreage doesn't really save you much anymore.

It's just really amazing what has happened in the last 2 years. The only hope we have at this point is for a recession to bring these prices back down some. Who knows if that will happen, though. Like I said, it's really demoralizing.
But do raw land prices ever really come down? From my experience I'd say not really. With so much land being held in family trusts or otherwise very well off owners I typically don't see "fire sales" on land. It'll be bought at/close to asking price and developed or the owner just continues to hold until things heat up again.
Let's go, Brandon!
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BlueHeeler
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3:04p, 6/30/22
AG
Quote:
But do raw land prices ever really come down? From my experience I'd say not really. With so much land being held in family trusts or otherwise very well off owners I typically don't see "fire sales" on land. It'll be bought at/close to asking price and developed or the owner just continues to hold until things heat up again.
I do know land came off prices in the late 80's, although I haven't seen it happen since. According to the Texas A&M real estate center, Texas land appreciates normally at about 6% a year. We just had 69% in 5 quarters. That has never happened in Texas history. So, I wouldn't think a pullback in raw land prices would be off the table. I, for one, have decided to put things on hold for now. Maybe that's a mistake, maybe it's not.

Although land is probably the safest investment you can buy in this environment, I don't think any investment looks too great after a 1 year 70% runup.
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txaggie_08
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In reply to BlueHeeler • 3:08p, 6/30/22
AG
At this point I'm casually searching, but unless some deal comes along that I can't pass up I'm probably looking to buy sometime around the 2nd quarter of next year depending on the economic outlook at that point.
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Yesterday
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3:58p, 7/2/22
AG
If you can afford to pay cash then and only then would I say it's a good idea to wait a year. But with interest rates rising you're losing any gain in value to interest payments.

No one can say but I don't see land dropping with more and more moving to Texas and more and more working from home.

I do see the dramatic rise in prices to slow but I still see the trajectory going up even if a little. It was cheaper to buy land 10 years ago. It's cheaper to buy land now than in 10 years.
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TikkaShooter
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10:11p, 7/2/22
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I do see the dramatic rise in prices to slow but I still see the trajectory going up even if a little. It was cheaper to buy land 10 years ago. It's cheaper to buy land now than in 10 years


All of this
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kyledr04
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2:24p, 7/3/22
AG
Yeah what really sucks is that if you didn't have the cash 10 years ago then you probably don't
now either. It's a hard dream to realize.
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Red Pear Realty
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4:38p, 7/3/22
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On the bright side, inflation for the last 10 years has been 2% and interest rates were 4%, but today inflation is 15% and interest rates are 6%.
Sponsor Message: We Split Commissions. Full Service Agents in Austin, Bryan-College Station, Dallas-Fort Worth, Houston and San Antonio. Red Pear Realty
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