All Texas Counties:  Up +1% in 2010 from 2009
Past 5 years: +38% / Past 10 years: +98%

Blanco, Kendall, Kerr & Bandera Counties:  Up +1% in 2010 from 2009
Past 5 years: +43% / Past 10 years: +161%

Gillespie, Mason, Llano & Burnet Counties:  No change  from 2009
Past 5 years: +54% / Past 10 years: +76%

The Texas real estate market and state economy as a whole have benefited from the energy boom in Texas from 2000-2010 (gas, oil and mining production up 166% and oil prices rose 265%) and accordingly, Texas remains one of the strongest states through the recession/recovery in all areas.  Specific to ranch sales, the boom has provided new buyers who sold their South Texas ranches in the Eagle Ford Shale oil play and put cash in the pockets of the majority of ranch owners who are themselves in the oil business- which along with paying only a fraction of a percent in real estate taxes and not having financed the property in most cases, sustains the impasse between sellers having little incentive to discount and buyers looking for one.

Sources: Energy Information Administration, Texas A&M Real Estate Center

Posted in Annual Market Analysis | Leave a comment

Is It The 1980s All Over Again? Then vs Now: The 1980s Real Estate Crash vs The Current Recession

by John Nisbet

Then… Fueling the boom to bust real estate market of the 1980s, Savings & Loans nearly doubled in size from 1982-1985 and 40 S&Ls in Texas tripled in size with many growing by 100% each year from 1982-1986 (figures courtesy the FDIC) by paying above-market interest rates while enjoying a period of deregulation with consequences ranging from the foreseeable (lax lending standards, direct investing in speculative real estate, lax start-up procedures and appraisals based on perceived future gains) to the unforeseeable (frequently not requiring buyers to sign personal guarantees, blatant conflicts of interest and fraud, exotic investments from casinos to ski resorts  and sometimes loaning the entire amount upfront and not checking that the projects were ever completed).

To add to the debacle, in 1986 both the price of oil crashed in 1986, dropping from $27 to under $10 per barrel, and Congress passed The Tax Reform Act of 1986 that limited loss deductions and removed many real estate tax shelters which, according to the U.S. Treasury, “led to a downturn in the real estate markets which played a significant role in the subsequent collapse of the Savings and Loan industry.”  Government efforts were ill-prepared and the subsequent 1989 $50 billion bailout came with a new government agency, The Resolution Trust Corp., tasked with selling S&L assets, which lead to a further slide in real estate values.

The result?  According to data collected by TAMU RE Center, prices in ranch real estate state-wide and in the Hill Country fell after 1985 and did not recover until the late 1990s.

…vs Now. Clearly the S&L Crisis rings familiar in today’s recession with buzz words like deregulation, irresponsible lending, etc. being regular talking points.  Thankfully, we have not seen a crash in the price of oil nor have any major tax overhauls like those in the 1980s on the docket.  What led to the slide in ranch real estate prices following the 1980s crash was that all three catalysts (irresponsible lending, tax reform and an “oil glut”) were all tied directly to ranch real estate because many ranches were financed, many were nothing more than tax shelters to investors pooling funds for that sole benefit and many were owned, bought and sold by those in the oil industry which still holds true today.  While one can see the similarities in the housing market in Texas to that of the housing and ranch real estate markets of the late 1980s, the difference in ranch real estate today is that much, much fewer of the ranches are financed which has created the impasse of sellers not needing nor wanting to reduce and buyers wanting a discount.  Simply put, sales are down but prices are generally stable.

Posted in Annual Market Analysis | Leave a comment

News Releases 2008-Present

San Antonio Express-News:  4/20/2012 “Texas Land Prices Up Slightly”
Values stable and rising due to institution investors, commodity prices, oil/gas industry and while the sales volume is expected to increase in 2012, the 2011 volume was half that of 2005.

July 2011 Tierra Grande, Journal of the Real Estate Center at Texas A&M University:  “Level Land”
Summary:  Prices statewide up slightly and level out in 2010.  The Hill Country-West area through San Antonio and Fredericksburg led the state with a 27-55% boost in sales volume over 2009 levels.  However, the impasse between buyers wanting a discount and cash sellers not needing to give one continues with some buyers deciding it’s better not to wait.

Austin Business Journal:  9/28/10  “Texas Hill Country Named Fastest-Growing Wine Destination”
Summary:  “Hidden gem” top 10 according to travel site away.com.  Texas is the 5th largest wine producer according to the Texas Department of Agriculture.

July 2010 Tierra Grande, Journal of the Real Estate Center at Texas A&M University:  “Landslide”
Summary:  Prices fell about 7% statewide in 2009 from 2008.  Sales fell to about half the volume seen in 2005, the lowest since 1995 yet the activity level is approximately that of levels from 1974 to 2001.  Average tract size of 73 acres, the smallest ever, reflect the absence of large property sales.  Buyers anticipate falling prices, sellers anticipate a turnaround and the impasse continues.

San Antonio Express-News:  5/7/2010  “Riding Out The Slide”
Summary:  TAMU economist Charles Gilliland at the Outlook for Texas Land Markets Annual Conference:  Statewide prices down ~7% in 2009, first drop since early ’90s and sales down 29% from ’08 because of impasse between buyers and sellers on prices.  Median tract size 73 acres down from 100 in ’08.  Guesses further decline in 2010 but “no idea” by how much.  TAMU chief economist Mark Dotzour:  Buyers on sidelines will start making purchases.

San Antonio Express-News:  1/16/2010  “Buyers Find Bargains on Country Property”
Summary:  Prices fell about 5% in 2009 statewide, sales fell 37% and the average size tract was 70 acres.  Unlike the 1980s, many owners paid cash and can hold prices up.  Debate over where prices are heading.

January 2010 Tierra Grande, Journal of the Real Estate Center at Texas A&M University:  “Small, Medium, Large:  Tract Size Affects Land Prices”
Summary:  Adjusted for tract size with large tracts selling for less per acre and vice versa, statewide prices down only 3% in 2009.

New York Times:  10/15/09  “The Charms of the Big City in the Heart of the Texas Hill Country”
Summary:  Movie and music stars talk about the allure of country living.

San Antonio Express-News:  8/18/09  “Land values take a hit in drought”
Summary:  Land values haven’t plummeted, but sales have.  Impasse of buyers who want a discount and sellers who don’t want to give them one.

San Antonio Express-News:  4/7/09  “Land Prices to Flatten or Drop”
Summary:  Impasse between buyers wanting a great deal and sellers not wanting to discount.  “Stability” as most popular word.

San Antonio Express-News:  10/19/08  “A Hankering for Texas Land”
Summary:  Boomers led the boom (double-digit increases followed by more double digit increases the next year), now on sidelines waiting along with investors and Mexican nationals while sellers don’t drop prices.

Austin American-Statesman:  9/23/07  “Ranch and Relaxation”
Summary:  Austin execs head to Hill Country ranches to live away from the city and commute.  Texans of all stripes buying; ranch defined as above 100 acres.

San Antonio Express-News:  4/13/07  “The Rising Cost of Country Living”
Summary:  Texas-sized percentage hikes for four years, dubbed “Little California.”

San Antonio Express-News:  4/19/09  “Buying Land”
Summary:  Prices to be stable in 2009, but prime tracts still will command a premium.

NY Times:  6/1/08  “31 Places to Go This Summer”
Summary:  The Texas Hill Country ranks as the #1 Destination.

San Antonio Express-News:  4/25/08  “Texas Land Grab:  Investors Gobbling Up Lone Star Property”
Summary:  Hill Country up 19%, double-digit increases followed by double-digit increases the next year though fewer sales in 2008 than 2007.

Posted in Related News Articles | Leave a comment