Has Texas’ land rush run its course? Record year ends with quarterly sales decline


 A year in which Texas rural land sales reached unprecedented highs ended with a surprising slowdown. Total land sales for 2021 surpassed 2020 by 17.8 percent. That was despite a fourth quarter with 953 fewer sales than the same period of 2020.

“There were 9,055 Texas land sales in 2021,” said Dr. Charles Gilliland, research economist with the Texas Real Estate Research Center at Texas A&M University, an expert on the state’s rural land market.

 In fourth quarter 2021, Texas recorded 1,283 rural land sales, significantly fewer than the 2,236 sales in fourth quarter 2020.

“Fourth quarter 2020 was crazy,” said Gilliland. “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.

“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.”

In 2021, a record 846,347 acres changed hands, 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. “The typical tract size sold in 2021 expanded by 14.6 percent to 1,305 acres.”

All regions of Texas posted double-digit price increases and substantial increases in total acres transferred.

“This explosion in annualized sales volume topped 2020 totals. However, the 2021 fourth quarter-only sales volume was 42.6 percent less than the total of fourth quarter 2020. Fourth quarter 2021 looked more like 2019, when pre-pandemic sales totaled 1,211. Last quarter declines occurred in all regions except the Panhandle and South Plains,” said Gilliland.

“The fourth quarter volume trend may indicate the insatiable demand that propelled prices and activity into record territory is beginning to wane,” said Gilliland. “The falling volume may also indicate market participants have begun to push back on current high asking prices.

“Fourth quarter 2020 was super active—up 85 percent over 2019—so a drop in quarterly volume does not equate to historical low levels,” said Gilliland. “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.”

Gilliland sees a couple of possible future scenarios. 

“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,” he said. “Some brokers even see activity picking up.”

Quarterly and annual statistical analyses for the seven Texas land market regions can be found on the Texas Real Estate Research Center website
  Funded primarily by Texas real estate licensee fees, the Texas Real Estate Research Center was created by the state legislature to meet the needs of many audiences, including the real estate industry, instructors, researchers, and the public. The Center is part of Mays Business School at Texas A&M University.   —30—  

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