The Texas land market continues to sizzle as a confluence of factors sends demand and prices skyward across the state. Understanding regional variations and evaluating value is critical for both buyers seeking hidden gems and sellers aiming to maximize profit. With smart strategy and expert guidance, both can successfully navigate the sizzling land rush.

In 2022, land sales were at record levels, a result of a robust economy and continued demand from investors and farmers. But, with the Federal Reserve recently raising interest rates, market participants are starting to feel a cooling effect on activity. During the first quarter of 2023, fewer acres were sold than during the same period last year, and a more modest pace is expected for the remainder of the year.

Unlike more contiguous states, Texas’ rural evaluating land market in Texas is dedicated to a wide variety of production types and influenced by many non-agricultural factors. As such, insightful discussions about statewide market trends can be difficult. This is why the Real Estate Center conducts its land studies at a regional level. By doing so, the Center avoids the “wash out” of important details and trends that can occur when studying agricultural markets on a statewide basis.

Each region’s sales data are collected from land professionals throughout the state and analyzed to capture market developments. The results of these analyses are presented on a statewide and regional basis. The seven regions were delineated in 2002, based on a countywide assessment of land types and production as well as input from regional land experts.

To analyze land price trends, the Real Estate Center uses a simple pricing method called the Sales Comparison Approach (SCA). The process takes into account recent comparable sales of similar land and draws a comparison between them to assess the land’s current market value. The SCA is a valuable tool for analyzing land values and is a standard methodology for valuing property in most Texas markets.

In addition to SCA, the Real Estate Center also utilizes a series of supplemental analyses. These include an examination of land productivity and a series of tests designed to evaluate the uniqueness of each Texas market. The results of these tests indicate that the land markets in each of the seven regions is indeed different.

Whether you are looking to invest in land as an opportunity for future appreciation or purchase it as a homesite, the Texas landscape offers an array of options for both. When weighing your options, it is important to assess your financial capacity, evaluate the specific land investment you are considering and consider your long-term goals. To help you do this, consider partnering with a trusted real estate professional and exploring seller financing which can spread payments over time, making high-priced properties more affordable. Additionally, cast a wide geographic net beyond areas with white-hot demand to find value opportunities in lesser-known counties. In doing so, you can potentially uncover a hidden gem that fits your investment and lifestyle needs.