Is Texas’ Land Rush Slowing Down?

In 2021, Texas rural land sales reached “unprecedented highs,” surpassing the previous year’s sales by 17.8 percent. Yet, the year ended with a “surprising slowdown,” according to the Texas Real Estate Research Center, with 953 fewer sales than in the previous fourth quarter.

“Fourth quarter 2020 was crazy,” said Dr. Charles Gilliland, research economist with the Texas Real Estate Research Center at Texas A&M University. “So anything near normal looks pretty calm by comparison. The fourth quarter 2021 drop may just be the result of a lack of inventory to sell.”

A record number of acres changed hands in Texas in 2021: 846,347 acres for an increase of 53 percent. “This continues to be the most active period in Texas land market history,” said Gilliland, who has monitored the state’s land market for 40 years. Additionally, “The typical tract size sold in 2021 expanded by 14.6 percent to 1,305 acres.”

Prices also were much higher. “Feverish 2021 demand for land, coupled with a dearth of listings, pushed prices up a remarkable 29 percent to $3,954 per acre statewide,” said Gilliland. “Total dollar volume reached a record $3.4 billion, up 97.6 percent over 2020.” And this was true throughout the state, with all regions posting double-digit price increases and substantial increases in total acres transferred.

Gilliland said, “The fourth quarter volume trend may indicate the insatiable demand that propelled prices and activity into record territory is beginning to wane. The falling volume may also indicate market participants have begun to push back on current high asking prices. However, “Fourth quarter 2020 was super active—up 85 percent over 2019—so a drop in quarterly volume does not equate to historical low levels. Besides, brokers report a general lack of inventory for sale. Ultimately, the number of sales doesn’t significantly differ from the 2019 fourth quarter numbers; they are actually up about 6 percent.”

Looking forward, he said, “Facts suggest Texas land markets may be returning to a more normal level of activity. On the other hand, despite the smaller number of fourth quarter sales, brokers report they are still very busy working with numerous prospective buyers. Some brokers even see activity picking up.”