Texas land values to hold strong in '05

By KARI KRAMER | East Texas Edition

Dec. 2, 2004 - According to the Real Estate Center at Texas A&M University, Texas land values are expected to hold strong.

The Houston area saw the largest increase in land values, while the Panhandle, after soaring values in the past two years, was the only region of the state to see a decrease in land prices. The average price per acre in Texas rose from $1,093 in the first half of 2003, to $1,178 the first half of 2004, according to the Center.

As the market climbs, Center reports indicate that some landowners are concerned with the stability of the land market.

"Because the market has reached historic levels, market observers and participants have become restive. Their concerns have turned from focusing on the prospering market to worries that the market cannot sustain the current level of prices in the long term," explained research economist Charles Gilliland in "Texas Rural Land Prices, 2003."

Added in the report, "Center studies of long-term land price trends to population changes over time suggest that the market continues to have upside potential. Specifically, if the relationship between population growth, interest rates and past land prices repeats the patterns observed since 1969, land prices should rise... with the prospect of an average 4 percent annual growth by 2008."

Land for hunting and fishing made up the largest percentage (68) of land purchased in the previous year, 22 percent of land purchased was for ranchettes or homesites and 18 percent was intended to be used in agricultural production, according to the Center.

"Markets continued to reflect strong demand from recreational buyers and investors, but farmers and ranchers reportedly have joined in the buying activity. Expectations of rising interest rates and anemic returns on alternative investments undoubtedly contributed to these striving markets," said Gilliland in his report for the first half of 2004.

Land prices are expected to remain strong for the next year in the state of Texas with variances in certain areas of the state. More information on Texas land prices can be found on the Texas A&M University's Real Estate Center website at http://recenter.tamu.edu/.