Whats everyone's opinion on what land prices in texas will do? Like everyone, I would love to have my own small/medium property. Its interesting to consider the various factors that go into pushing the land prices higher.

Right now, it seems that the growing population, low land taxes (ag), succesful economy (oil) have pushed land prices fairly high, much higher than the real value of land. (real value of land = value based on the income that could be generated off it).

If, for example, the price of oil could be predicted to slump every 15 years, and we are due for a slump, then perhaps some of the oil money going into recreational land would stop. Though, I am not sure how dependent texas economy really is on oil. It seems to have diversified somewhat.

Or, for example, if the population is expected to continue expanding considerably, then it is probably inevitable that any land within 2-3 hrs of the cities will continue to rise in value regardless of oil.

Land across the nation didn't really dip much at all when the housing bubble reset. That perhaps makes a little sense when you consider the financing restricitons on land (eliminating the subprime problem), but still there is typically a correlation between the two, especially as bad as the depression was. We really didn't see that in rural land too much.

Texas's economy as a whole has been booming, and land values have followed. If the worst recession since the great depression didn't slow Texas land prices much, I am not sure I would predict an end in sight. Plus, I don't see oil prices getting cut in half or more anytime in the near or not so near future.

Texas population is booming along with the economy. There are just so many people that want a place a few hours outside of the huge cities to hunt, relax, etc and they have the dispensible income to buy it.

I think it is evident that owning land this land has value to the buyers that far exceeds the return you could get on it from leasing for hunting, farming, ranching etc. Texas' land values have exceeded the return rate that you can get from that land for decades now, so I am not sure that is ever going to reset itself as the population of Texas continues to boom.

What I predict will follow next, is not land prices going down, but actually the rate of return you get on the land to increase slightly when they realize how much they are not making on the place in relation to how much they pay. Since much of this land is not that great for farming, you will likely see some increased prices in hunting prices for leases. We are already seeing lease prices increasing to a degree. Grazing is held artifically low, due to the ag exemption laws, where it makes since to run cattle for next to nothing just to get the Ag exemption.

The only thing I can see decreasing rural land prices in texas would be tax reform and greatly reducing or restricting the ag exemption. And i just don't think that is ever going to happen, so land prices will probably keep increasing, even though the return on the Texas land is next to nothing (until you sell it for double in a decade or two).

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Land across the nation didn't really dip much at all when the housing bubble reset. That perhaps makes a little sense when you consider the financing restricitons on land (eliminating the subprime problem), but still there is typically a correlation between the two, especially as bad as the depression was. We really didn't see that in rural land too much.

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My recollection was that land prices nationally were buoyed by historically high ag commodity prices.

I think you were right crossbow, but even recreation land (non crop/ag) didn't seem to drop much at all. Kind of interesting to say the least. I would have thought there would have been a noticeable dip.

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The only thing I can see decreasing rural land prices in Texas would be tax reform and greatly reducing or restricting the ag exemption.

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This needs to happen, but as you suggested, it probably wont.

What goes up must come down and I don't doubt that Texas will one day see a bust that results in zero or negative population growth. How much this will affect rural land prices is hard to say.

I also see a time coming where technology and high speed communications and infrastructure advance to a point where most "office" jobs can be done at home, even in very rural areas. Without a commute to contend with, people will settle deeper and deeper into rural areas and that will drive or at least support current land prices.

I've pretty much given up on owning land.

Too expensive. Wouldn't get enough out of it.

Maybe someday own a vacation home in a recreational area like northern New Mexico. But that probably doesn't make financial sense either, compared to renting a home.

So the price will go down when demand goes down. And the demand will go down when people decide it's not worth it to own land. Kinda like I have decided.

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I've pretty much given up on owning land.

Too expensive. Wouldn't get enough out of it.

Maybe someday own a vacation home in a recreational area like northern New Mexico. But that probably doesn't make financial sense either, compared to renting a home.

So the price will go down when demand goes down. And the demand will go down when people decide it's not worth it to own land. Kinda like I have decided.

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I am right there with you on pretty much giving up buying in Texas due to prices. You have to pretty much be a millionaire to make the finances work, if you didn't already inherit the place. Land that returns nothing but costs $2500 per acre or more adds up pretty darn quick when you need at least 100 acres to really make it big enough to hunt. There is a reason so many small tracts are selling in Texas and the big ranches are getting split up.

I guess the flip side is even if you don't return anything on it annually, you do get the savings from not having to pay a couple thousand for a lease. Plus when you are ready to sell it will likely be worth much more. There are worse places to put your money if you have a large amount of expendable income or am willing to flip the place in a few years to make a profit. However if you need an annual return on the place and don't want to sell it to make a profit, then Texas isn't probably the best.

You can still buy cropland in the midwest that gets you close to a 5% annual return from leasing it and has better deer and turkey hunting but it's not in Texas. If I ever did buy land, it would likely be somewhere that got a decent annual return like that, but of course that could bust too if commodity prices decline and then you don't have a strong population of people to keep prices high.

I've given up on leasing too.

Saved a lot of money in the process of just generally giving up.

Regarding how Texas land prices did during the great recession: TAMU Real Estate Center has a great article in 2011 land prices.
http://recenter.tamu.edu/pdf/1998.pdf

Some select quotes:

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Texas regional land market price trends in 2011 reflected variations in market dynamics. Continued demand for secure investments sustained increasing prices for cropland. Market pressures were especially strong in irrigated cropland markets. Those pressures also helped to modestly boost the overall statewide price level.
Markets were plagued by a slow volume of activity. The more urban-oriented areas in the northeast and far south Texas posted weaker prices. Demand for transitional and development tracts weakened and recreational land buyers were scarce.

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Small-sized transactions continued to dominate the overall market as the 2011 median of 74 acres nearly matched the 2010 typical size of 75 acres (Figure 2). That size remains well below the 100-acre levels seen from 2000 to 2005.The number of large property sales remained depressed. Brokers in the field reported that the impasse over pricing continued between potential buyers and sellers of sizable tracts in 2011. However, a small number of wealthy individuals have reportedly begun to buy very large, top-quality working livestock operations.

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There is a great chart on page 6 about past prices year by year, both nominal and real: Interestingly, price/acre fell substantially during the mid/late 80s.



Fast forward to 2013 Summary by TAMU Real Estate Center:
http://www.txasfmra.com/wp-content/uploads/2013-Texas-Rural-Land-Value-Trends.pdf
Quotes:

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Texas land market developments in 2013 saw overall prices rise nearly 10 percent over 2012 prices with the statewide size adjusted price settling at $2,160 per acre. That robust price increase reflected markets focused on small property sales with strong price pressure on quality properties. Small property prices increased more than 19 percent across the board.

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Sales prices in 2013 were generally stable to modestly higher for most land classes throughout the region. Sales prices for cultivated acreage stabilized with weaker commodity prices. Recreational properties were mostly stable to stronger. .... Recreational uses of land, primarily hunting, continue to be a primary influence in the minds of buyers.

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The demand for urban fringe properties continued to improve during 2013 as general economic conditions and the demand for housing in the Austin area increased.

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My comments:
As would be expected, there is a correlation between texas land prices and overall economy/stock market.

Considering that right now the stock market is hitting all time highs, economy is growing right now, and interest rates are extremely low, it is very understandable that land prices are doing well currently.

I guess the big question is still how land prices will balance between "interest rates will rise", "stock market will have some hiccups", and "texas population will continue to increase".

I vaguely remember the land market in the 80's since I was just a kid, but yeah, there was a "they're never making any more of it" mentality going on before the S & L scandal hit and it all fell like a turd in a well.

Land historically has never paid for itself, you've almost always had to have revenue streams above and beyond what it would generate itself to pay for it. (unless you bought it from Stephen F Austin himself).

I am waiting out the oil boom. Downside is that mineral rights are going to be spread to the winds now.

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Land across the nation didn't really dip much at all when the housing bubble reset. That perhaps makes a little sense when you consider the financing restricitons on land (eliminating the subprime problem), but still there is typically a correlation between the two, especially as bad as the depression was. We really didn't see that in rural land too much.

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My recollection was that land prices nationally were buoyed by historically high ag commodity prices.

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I saw some $10k/acre farmland in Indiana a few months back. That price was based on $7 corn and high bean prices. I don't think they can get that now......

Ag lands based on oil is a little difficult. If there is a snowball's chance in hell there is oil, the mineral rights will NOT go with the land. I've actually heard of a ranch or two where the hunting lease price has dropped due to all the oil activity.

Oil is down to $61/barrel without a bottom in sight, so I guess we will see first hand how dependent TX land prices are on oil, especially recreational land.

While I don't wish any economic harm on anyone, I am hoping land prices drop to reasonable rates. Will be interesting to follow over the next few years.

I know of 582 ac in Hamilton county for sale, low fenced, 2 story log home, kept like a federal park, pristine and amazing... PM me if you need more details... 2 hrs from Austin... 1 west of Waco. 2.5 from Ft Worth...

What about timber prices? How does that play into land value?

I look at a lot of places up in East Texas and the land seems to be fairly reasonable with the idea that you can earn a return based on timber harvest.

I dont see land prices ever going down, they can only go up based on the theory of supply and demand.

-They arent making any more land
-Increased Urban Spraw
-Competition for recreational lands
-Big Ag is only getting bigger, you got to play big to hang with the big boys

I'm lucky to come from decent sized family land but when you have developers offering $20k/acre for farmland to build subdivisions it is going to be difficult for some smaller farms not to take the essential buy out.

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I dont see land prices ever going down, they can only go up based on the theory of supply and demand.

-They arent making any more land
-Increased Urban Spraw
-Competition for recreational lands
-Big Ag is only getting bigger, you got to play big to hang with the big boys

I'm lucky to come from decent sized family land but when you have developers offering $20k/acre for farmland to build subdivisions it is going to be difficult for some smaller farms not to take the essential buy out.

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From 1985 to 1991: "Average" Land prices dropped 37% in "nominal dollar value" and 50% in inflation adjusted value.

What's the price Skizmo?

One of the more interesting land purchases I'm aware of involved a rancher selling four or five sections of land to some wealthy hunters who wanted it for hunting.

After they signed the papers, they asked the rancher if he would mind keeping cattle on the land to keep the brush down.

So the rancher sold the land for a really good price and gets free grazing on the land with the stipulation that he has to remove the cattle by about two to four weeks before hunting season and can put them back on the land once the hunting season is over.

I'm an engineer not an economist (so forgive my assessment of money) but I can stand it when people refer to the value of things based on dollar value or adjusted for inflation, etc. The reality is the dollar is made up and has no real value in my opinion. Its not back by gold or silver anymore and changes based on the amount of money the government puts in circulation or the credit rating of the US as the country go trillions more in depth.

Land however is real and you can set your own price for it

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One of the more interesting land purchases I'm aware of involved a rancher selling four or five sections of land to some wealthy hunters who wanted it for hunting.

After they signed the papers, they asked the rancher if he would mind keeping cattle on the land to keep the brush down.

So the rancher sold the land for a really good price and gets free grazing on the land with the stipulation that he has to remove the cattle by about two to four weeks before hunting season and can put them back on the land once the hunting season is over.

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Doesn't sound all that odd to me.

I'm not remotely wealthy but I'm trying and of course looking for a way to acquire property for recreation. Seems in a case like this the new owners get to keep the ag exemption and with the rancher running his cattle they've got somebody who would be able to keep an eye on the place to a certain extent.

I'd do something like that in a heartbeat if I found the right piece of property.

I know a deal where some doctors out of houston bought a rice farm for water fowl hunting and had farmer keep farming at a good rate.

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I'm an engineer not an economist (so forgive my assessment of money) but I can stand it when people refer to the value of things based on dollar value or adjusted for inflation, etc. The reality is the dollar is made up and has no real value in my opinion. Its not back by gold or silver anymore and changes based on the amount of money the government puts in circulation or the credit rating of the US as the country go trillions more in depth.

Land however is real and you can set your own price for it

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True, but just because you say it's worth that, doesn't mean it is.

Back to the original question. In the 80's bust there was a ton of rural " farmettes/ranchettes" that ended up in foreclosure. Real working land did not suffer but , in the 70's boom , a whole pile of middle class engineer/shop foreman types in Houston bought those Lake lots or those 20ac little walking around spreads for the weekend " take the kids out and rough it " places. My dad bought a Livingston lot and 15ish acres over near Weimar just before the bust. Gave the stuff to me later. Sold it all in the early 90's for pennies on the dollar.
Sit tight.

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I'm an engineer not an economist (so forgive my assessment of money) but I can stand it when people refer to the value of things based on dollar value or adjusted for inflation, etc. The reality is the dollar is made up and has no real value in my opinion. Its not back by gold or silver anymore and changes based on the amount of money the government puts in circulation or the credit rating of the US as the country go trillions more in depth.

Land however is real and you can set your own price for it

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Since "the dollar is made up and has no real value"...can I have all your dollars?

I'm kidding of course, but all those "real" things you mentioned like gold and silver and land, we buy them with dollars (or whatever other currency I guess) so they have value in dollars (or again, whatever other currency).