According to Texas A&M research economist Charles Gilliland of the Texas Real Estate Research Center, the Texas land market is seeing a high demand for rural property and a dearth of inventory to sell.
The overall number of rural land transactions in 2021 increased from 7,684 in 2020 to 9,055. Gilliland reported a 17.8% rise despite a fourth-quarter sales decline of 953 units compared to the same time in 2020.
During the second quarter of 2020, there was a lot of activity. “However, the third and fourth quarters were just as busy as ever, and that lasted throughout the year,” he said. “There has been a big demand for rural land all around the state and across the country since that third quarter of 2020 up until today.”
According to a rural property market specialist, Texas sold 1,283 parcels of rural land in the fourth quarter of 2021, a considerable decrease from the 2,236 parcels sold in the fourth quarter of 2020. There was a COVID-19 pandemic at the end of 2020 and the beginning of 2021, and Gilliland believes this is why there were so many sales at the end of 2020 and the beginning of 2021.
“Living in the city has lost its appeal due to the closure of the city’s formerly vibrant nightlife. When people realized that they could work from anywhere if they had access to the internet, Gilliland added, they were amazed. Because of this, investors who are seeking a safe location to invest their money have followed suit. There has been a flood of people interested in purchasing land for a variety of reasons.”
Gilliland estimates that prices for rural land will rise by 29 percent to $3,954 per acre in the state by the end of 2021 due to a significant decline in sales due to a lack of inventory. There was a record $3.4 billion in total dollar volume in 2021, or an increase of 97.6 percent over 2020, a measure of the total number of dollars engaged in a given period’s transactions.
A record 846,347 acres changed hands, a 53 percent increase, during this period, he added. “This is the most active period in Texas land market history… for 2021 to be $3.4 billion over for the whole year.” Until recently, that figure stood at $1.4 billion.
He advised those looking for land to be ready to put in a significant amount of time in their quest.
“The brokers who list and sell houses don’t have a lot to sell right now because there has been so much purchased in the last year,” he added, explaining that sales in the fourth quarter of 2021 were lower than in the fourth quarter of 2020.
“People should be prepared for the fact that getting out and finding a property to buy will be difficult. However, sales in the fourth quarter of 2020 were 85% more profitable than in the fourth quarter of 2019.”
Many potential land purchasers are still out there this year, according to Gilliland.
While there aren’t many landowners eager to sell, “my assumption is for the foreseeable future we will see the same kind of thing happening; strong pricing and people competing with their other for sales,” he added. Be patient and look for what you really want, my advice would be.
” As long as you accept that it may take some time to get exactly what you’re looking for, you won’t be tempted to settle for anything less than you truly desire.”
When asked about pricing adjustments in the upcoming years, Gilliland said academics are unsure what to make of what happened in 2020 as well as into 2021 and beyond.
It’s impossible to predict when the music will cease if you will.” He added, “I know that a lot of people believe that prices will return to normal at some time. “However, given the high demand for properties and the short supply of properties for sale, it doesn’t appear that anything will change very soon.”