Ready to build a custom home or your dream second shelter? It seems that now is the time to buy. According to a report by the Texas Association of Realtors, small land sales are booming across the Lone Star State as prices experienced a slight drop in 2016. And we do mean slight. The average price per acre on small land sales saw a .03 percent decrease last year.
Dallas seems to take exception to the price decline, however. On average, local land sales showed an 11.44 percent price increase per acre last year. The average price per acre rose to $8,315. But that hasn’t slowed buyers. In the Dallas Fort-Worth area, small land tract sales were up 20.87 percent in 2016.
Another notable exception to statewide trends is West Texas. Small land sales in that region actually fell 20.6 percent from 2015. And in South Texas and Far West Texas, small land sales saw much more significant drops in average price per acre (64.9 percent and 3.9 percent, respectively).
In a statement, Texas Association of Realtors Chairman Vicki Fullerton commented on the recent report. “As our state’s population continues to grow and the footprints of Texas cities expand, the demand for rural land will only increase. At the same time, after consecutive years of rapid growth in real estate land prices, prices in many regions have leveled off.”
South Texas Land Sees Steep Drop in Price
With few exceptions, increased demand for small land lead to a decline in the average tract size purchased in 2016. For reference purposes, there’s no hard definition for ‘small land tract.’ Generally, anything under 200 acres is considered small (except in Far West Texas where anything up to 8,000 acres qualifies). The increased pressure on developers may be one factor. Economic downturn may be another.
Charles Gilliland, economist with the Real Estate Center at Texas A&M University weighed in. “While the Texas land market remains strong, multiple factors are impacting land sales activity throughout the state. Rising prices of irrigated farmland and a sluggish agricultural sector are driving up land costs in the Panhandle, and residual effects of the oil and gas downturn have slowed small land sales activity in West and South Texas. Statewide, shortages in prime land are stifling land price growth as developers consider less desirable land tracts.”
Leaders Cautioned to Protect State Resources
Naturally, sharp increases in land sales raises a few concerns. With growing demand for land across Texas, Fullerton urges state and local leaders to consider long-term consequences with regard to the state’s resources.
“The wise utilization of Texas land is the bedrock of our state’s economy and quality of life,” Fullerton said. “As Texas continues to experience rapid population growth, it’s important that leaders across our state and within our communities take care to ensure that ongoing land segmentation and development preserves the unique culture of our state’s regions and does not harm essential industries.”