The allure of wide-open spaces is drawing people to snatch up rural land in Texas at a record pace.
Ranch sales in the state nearly doubled between the second quarter of 2021 and the previous year, according to data from the Texas A&M Real Estate Center.
While the pandemic played a role in driving down sales in the early part of 2020, the market rebounded considerably, surpassing brokers’ expectations and far exceeding 2019 numbers.
“It’s a pretty exciting time in land markets right now,” said Charles Gilliland, a land market expert for the Real Estate Center. “A lot of times, it’s just ho-hum, but not right now, that’s for sure.”
During the second quarter of this year, there were more than 9,000 land sales in the state, an increase of 13% during the same period in 2020. Land sales in the second quarter of 2019 totaled about 6,000, similar to the volume of sales in the years going back to 2016.
Statewide, prices ballooned with price-per-acre increasing almost 18% in the last year. But some regions in Texas are hotter than others.
In the Hill Country just north of Bexar County, the price-per-acre jumped sharply in 2019 — by 18% over the previous year — then rose again in 2020, by another 6% to $10,500 an acre.
The Real Estate Center evaluates land sales volume and prices by region. Of the eight regions in the state, the areas with the biggest increases are Northeast Texas, the Gulf Coast/Brazos Bottom, the Waco-Austin-Hill Country area, and South Texas, which includes San Antonio.
Sales and prices are lower in West Texas and the Panhandle. “Essentially that part of the state has been transformed from a quiet ranch market to an industrial market,” Gilliland said. “Oil has been inspiring a lot of activity out there so when the prices collapsed last year, it got quiet, and it’s kind of stayed that way.”
The recent Texas land rush began shortly after a complete halt in sales in March 2020, said Robert Dullnig, broker associate of Dullnig Ranch Sales who recently announced the sale of Geronimo Springs Ranch, a 2,770-acre Hill Country property on San Geronimo Creek. Listed at $43 million, the property was on the market for only 45 days.
That’s a tremendous turnaround from what Dullnig and other land brokers predicted when the pandemic began.
“We didn’t show a ranch product for three weeks because of COVID. … No one knew what was going to happen,” Dullnig said. “All of a sudden, about mid-April to late April, the floodgates opened. One week specifically, I had five different buyers call their request, all saying across the board, ‘I want to be an hour and a half from San Antonio. We’re never going to be stuck in a city again.’”
None of the potential buyers were “tire kickers,” he said. They were determined and serious, with some telling Dullnig they planned to cash out a certificate of deposit or sell a commercial property or take money from an investment fund to buy land. The pandemic provided the motivation.
“Everyone was adamant they were not going to be stuck in a city again, that if this country were to shut down, they were going to have someplace to go to,” Dullnig said.
In addition, people are looking for an investment to protect their capital and land tends to retain its value, even when the economy sours, Gilliland said.
As the pandemic raged on, by July 2020, rural land started selling at a rapid pace, Dullnig said, with larger tracts priced in the $30 million to $50 million range very common.
What he thought, early on in 2020, would go down in history as a slow year turned out the opposite. “It was the highest sales volume that we’ve had in one year,” Dullnig said. And the requests keep coming.
But transactions have slowed as the inventory of rural land has been scooped up in the past year, especially those with water — located on a creek or river, or lakeside — which also carries a bigger price tag.
“What I’m hearing from a lot of brokers is that they’ve sold everything that they had to sell and they really don’t have any inventory now,” Gilliland said, with some taking to “ringing doorbells,” asking landowners if they want to sell.
“I talked to a broker in Junction and he said that any listing they get, they sell within one or two days right now,” he said. “Everybody that I speak to is very busy.”
The research economist also believes, having studied the industry since the 1980s, that the current land rush eventually will come to an end and prices will flatten out.
“But at this point, there’s nothing on the horizon that looks like it’s going to cause that to happen,” he said.