Texas Rural Land Posts 9% Gain in 2014
Apr 23, 2015
The value of Texas rural land rose 9% on average in 2014, according to Dr. Charles Gilliland, research economist, Real Estate Center (REC), Texas A&M University. Speaking at the 25th annual Outlook for Texas Land Markets in San Antonio, Gilliland noted that based on the sales reports filed with the REC: "There was strong demand for recreational properties and strong demand for cropland in 2014." The state-average price of an acre of Texas rural land reached a record of $2,354 an acre. The "real" value (in 1966 dollars) reached $419 an acre, which is also a record.
Gilliland told attendees that "it took 33 years for the state-average price of rural land to reach $1,000 an acre. But it took only nine years for the state-average price to reach $2,000 an acre. On average, Texas rural land is up 33% since 2009 and up 124% since 2004," he added.
The question going forward to Texas rural land values in he potential impact the sharp drop in crude oil prices will have on rural land values. Two of the largest and oldest oil deposits in the U.S. are located in Texas. With the recent advances in oil exploration and fracking, the Texas economy has surged, resulting in a lift in Texas rural land values.
Gilliland says research by the Texas REC indicates a "strong and close co-movement" between the price of crude oil and rural land values. "This means oil prices and rural land prices tend to move together with land values following the movement in oil prices by one to three years," he said. If oil prices surge back above $65 by the end of 2015, rural land values may not see much impact. Realtors attending the conference indicated land sales are very active and no major "blow ups" have yet occurred. "Some indicate that their energy buyers have decided to back off for the time being, thinking they may get a better deal later," Gillilland said. But no deals have blown up in terms of buyers refusing to close or buyers being unable to close.
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