Despite continuing turmoil in the oil patch, Texas land markets managed to post a small price gain in the second quarter of 2016, moving up just short of 2.5 percent to $2,500 per acre from the 2015 year-end price of $2,441 per acre. That increase improved upon the anemic 1 percent growth for all of 2015. The statewide typical size of properties sold moved up by 57 acres to 1,144. Total dollar volume of sales at $816.6 million dropped for the second straight quarter indicating that fewer acres moved through the market during the first half of 2016. The inflation adjusted real price settled at $441 per acre (in 1966 dollars) setting another record high.
Weak performances in Far West Texas, Gulf Coast—Brazos Bottom, and South Texas reflected downward market pressures likely linked to energy price declines. Additionally, although the Panhandle and South Plains registered an increase over 2015 prices, commodity market retreats acted as a drag on overall second quarter performance leading to a 2 percent drop below first quarter results. Price increases in the West Texas, Northeast Texas, and Austin—Waco—Hill Country regions offset weak results in the other regions.
This mixed bag of results suggests that buyers may have cooled off from the strong demand in the past two years, given current price levels. Weak energy prices coupled with low commodity prices combine to threaten the general prosperity of much of the region. With uncertainty fueled by the raucous election, buyers may remain cautious in the coming months.