Doom And Gloom? Not So Fast; South Texas Ranch Prices Six Months Into Covid

Readers of my blog will remember that I addressed Covid and it’s potential effect on ranch prices at the onset of the pandemic.  I postulated that the crisis would have a similar effect as that of the 2008 financial crisis and it appears I was correct, so far.

In a recent presentation, Dr. Charles Gilliland of the Texas A&M Real Estate Center presented timely data on ranch sales over the last two quarters.  His presentation in its entirety is available for those that have an interest in other areas of Texas:

https://www.youtube.com/watch?v=nkpfp41Ircw&feature=youtu.be

My focus is South Texas and so far, Dr. Gilliland reports only modest changes in that market.  First of all, Real GDP drives the real estate market and the percent change the past two quarters is the greatest since those numbers have been reported.

Rev Pg. 2

Closer to home, we all know ranch sales tend to reflect oil prices.  and those prices, while starting to recover, also dipped to the lowest point in recent history.

Rev Pg. 3

The combination of the two, coupled with the pervasive “coffee shop talk” I often refer to has led to a minor slump in sales of ranch properties in South Texas as shown in the graph below.

Rev Pg. 5

However, please note below that while dollar volume was down, sales volume was down, and total acres sold was down, prices increased and average size increased.  I’m no economist, but that leads me to think sellers are secure in their properties and, so far, Covid has not impacted ranch real estate market prices in South Texas as much as the 2008 crisis.

Rev Pg. 6

My sincere thanks to Dr. Gilliland for wading through stacks of mindless numbers to produce usable data which is invaluable to the smart land investor.  As always, please feel free to contact me if you have any interest in owning a South Texas Ranch.

Jim

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