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In summary, 2008 turned out about as we predicted last year, with activity levels down, and overall values in our territory averaging about 7% appreciation. This is a mean of the top 25% (which gained by 12%), the mid 50% (which gained by 6%), and the lower 25% (which did not gain at all, on average). Statewide, for the first time in a decade, we began to see some areas clearly retreat, though some of those same areas were among the most meteoric in their previous ascent to record high values. We saw fewer out of state buyers shopping around than we have seen in years, and all buyers, whether local or foreign, were much more discriminating in the purchase process.

There are still buyers on the streets and highways. Many are financially and emotionally qualified to own a large ranch, desiring a quality rural environment in which their children can experience natural wonders in a world that is rapidly losing them. Many also see investment opportunity, as the stock market retreated throughout 2008, but seems to be recovering somewhat in first half of 2009. Also, many who were afraid of the possible negative consequences of the Obama administration, are now beginning to believe that many of the radical positions and statements made during his campaign may not reach fruition due to the political process or other reasons. We have not heard any post-election talk about possible increases in capitol gains taxes, which kept many buyers and sellers on the sidelines the past two years.

We are also seeing somewhat of a return to productivity as a value attribute, though recreational buyers still dominate the marketplace. However, many of these buyers now include soil quality, groundwater and production infrastructure as key criteria.

We believe in land as a proven long term investment, end of story. No matter what the economy, politics or world situation, the land will always be there to sustain us, at least as long as we don’t turn it against us by abusing it.

The future should bring a further cooling of Texas land markets in 2009, price-wise. However, there will be an increasing number of educated sellers who recognize the staggering increase in value experienced from 2000 – 2007, and need or desire to sell (for whatever reason), and price their offering aggressively from the get-go. This will create even more price competition, and the result may be an overall retreat in value for marginal land within our territory. Another result may be an increase in sales activity, as buyers and sellers begin to decrease the gap between them.

As always, there are many exceptions to this report, and many sales have occurred which we have not reported in this article due to space limitations, plain ignorance or confidentiality. Prices within each area can vary substantially due to various factors, and we always welcome new factual data and your opinions. We appreciate our many friends and peers who supply us with good information, and are committed to this ongoing project for years to come. You are welcome at our office in Boerne at any time to share a cup of coffee, talk about land conservation and property rights, and check out our unique operation. Also, we hope that you will consider our professional services if the need arises, and we wish you and your family a safe and bountiful 2009 and beyond. Thanks for your consideration.

In summary, 2007 saw land prices continue to escalate in our region, but at a slightly lower pace than previous years. We are also seeing a trend over the past two years now of about 10% fewer transactions/year. Prices have now well exceeded all previous levels on a time-corrected value basis, thus, we are at an all-time high for land values all across Texas. Out of state buyers had a lesser presence, and most of buyers were in-state landowners with holdings close to major cities cashing out and moving out to more remote locations. Statewide, we still saw the most significant gains in West and North Texas, and farmland has begun to escalate, as farmers from the north are being priced out of land in their zone, and have begun to find Texas prices rather attractive, not to mention the milder climate and longer growing season.

The 2007 statewide land appreciation figure was established at 20% by those in the know, though this figure is somewhat lower in our territory, perhaps closer to 15%. Stock market jitters have negatively affected many million $-type buyers, some of whom saw net worth fluctuating by 10% on a daily basis. The mega-buyers have retreated to the sidelines for the most part, though some still hover patiently, waiting for just the right opportunity to slam dunk just one more deal before things turn south. Gasoline prices topped $3.00/gallon, which will ultimately affect how far people are willing to drive to work and to play, as well as affecting the cost of food production, construction and vacation travel.

What does the future hold? We nailed our territory forecast last year, and believe that a further slowdown of appreciation is in the cards, perhaps dropping below 10% in 2008 for our territory, and down to perhaps 12% statewide. The year has started surprisingly well, with lots of inquiries, a few closings here and there, and folks being much more careful in shopping for a land investment. Lenders are definitely tightening their purse strings, and appraisers are becoming extremely careful in their evaluations. Sellers who want/need to sell will become more aggressive in pricing, and offerings priced fairly from the get-go will sell quickly, particularly if they are quality properties.

We believe that it is a good time to be a seller of land in Texas, and also believe that, because of that, listing inventories will increase in 2008. As a result, pricing strategies will become all-important in landing that perfect buyer, who continues to become more and more selective in the buying process. Also, as lenders and appraisers tighten up, proving value becomes even more critical to success of a deal.

As always, there are many exceptions to this report, and many sales have occurred which we have not reported in this article due to space limitations or plain ignorance. Prices within each area can vary substantially due to various factors, and we always welcome new factual data and your opinions. We appreciate our many friends and peers who supply us with good information, and are committed to this ongoing project for years to come. You are welcome at our office in Boerne, at any time to share a cup of coffee, talk about land conservation, and check out our unique operation. Also, we hope that you will consider our professional services if the need arises, and we wish you and your family a safe and bountiful 2008 and beyond.

In summary, 2006 was an even stronger year statewide for land appreciation than has ever been seen, though price levels adjusted to the actual value of the dollar are just now reaching previous heights. The markets are driven by out of state buyers, highly paid corporate executives and sellers of suburban land being converted to subdivisions, commercial uses or even industrial sites. There is also an increasing presence of Mexican investors, many of whom see more stability in U.S. real estate. With the stock market continuing to soar, and the increase in the popularity of South Central Texas as a place to located medium to large-sized businesses, there appears to be a continuing supply of cash to fuel investment in real estate.

A recent conference on Texas land markets concluded that the average appreciation rate of an acre of land in Texas in 2006 was 23%! This figure was undoubtedly bolstered by 100+% gains in areas of NW and West Texas, but is still staggering nonetheless. The “experts” conclude that, on the overall, appreciation will continue upward, as long as the nation continues to feel secure from terrorism and recession. Given the artificial nature of our economy these days, recession seems unlikely. However, the threat of a major terrorist attack on U.S. soil remains a wild card, and if it happens, land markets will doubtless suffer, at least for the short term.

What could be next? This company feels that the future for South Central Texas is solid, if not spectacular. We think that a continuance of the rate of appreciation (18%) seen in the last 3 years is very unlikely for the next 3, but that values will continue to climb steadily, perhaps backing off to single-digit rates for the foreseeable future. We estimate that South Central Texas as a region will see about a 15% rate of appreciation in 2007, as Austin, San Antonio and the Texas Hill Country continue to shine as some of the most desirable places to live in the entire country. We also see fallout from the “bubble” of other parts of the country having a trickle-down effect on our area, with lenders tightening their purse strings as the scent of risk becomes more prominent in the air.

As always, there are many exceptions to this report, and many sales have occurred which we have not reported in this article due to space limitations or plain ignorance. Prices within each area can vary tremendously for a variety of reasons, and we welcome new factual data and your opinions. You are welcome at our office in Boerne at any time to share a cup of coffee, talk about land conservation and check out our unique operation. Also, we hope that you will consider our professional services if the need arises, and we wish you and your family a safe and bountiful 2007 and beyond.

 

The summary judgement is clear. South Central Texas has and will continue to be a strong, active land market driven by developers and recreational users. Cattle producers are flexing their muscles as well, having had several decent years to pay down debts and actually try to accumulate some cash. The recent drought has dampered some of that enthusiasm, however. Austin, San Antonio and their satellite cities continue to explode, with some spillover now being experienced in the more rural areas, including Bandera, Junction, Gonzales, Pleasanton and Hondo, to name a few. We see lots of “irrational money” coming to Texas trying to participate in this phenomenon, and there seems to be no end in sight. Speculation is rampant, and many major players are waving wads of cash at significant, large parcels of land, whether they are for sale or not. It’s a good time to be a seller in South Central Texas, no doubt, though the explosion is far from over in our opinion.

The factors that have always been positives for South Central Texas continue to weigh strongly in the minds of buyers. Cultural diversity, proximity to Gulf and Mexico, mild climate, scenic beauty, economic strength, recreational value and the dynamic markets of Austin and San Antonio continue to be the primary drivers of desirability. Early 2006 is finding some increases in the recently-limited supplies of land for sale. Perhaps this is a foreshadowing of a slowdown in appreciation, and an indicator to some of those of you who have been sitting on the fence that it may just be time to take full advantage of this favorable situation.

The “waves” continue to ripple, even into West Texas, where values have tripled in the last two years. The secret is finding the perfect dip between each wave in which to invest, then wait for the inevitable rise of the next wave to come, and locating the perfect apex of that wave from which to sell. The wave theory has historically proven to be reliable, not just in Texas, but all over the country. It will continue to hold up as long as there is something to stimulate the next series of waves, which there always has been in the past.

There are many exceptions to this report, and many sales have occurred which we have not reported due to space limitations. Prices within each area described can very tremendously for a variety of factors, and we welcome new factual data and your opinions. You are always welcome to stop by our office at The Falls, behind the Wal-Mart in Boerne, to check out our operation. And, we hope that you will consider our professional services if the need arises, and we wish you and your family a safe and bountiful 2006 and beyond.

 

In summary, it is apparent that Central Texas has been and will continue to be a hotbed of real estate activity due to its interesting variety of cultures and geography, mild climate, proximity to Mexico and the Gulf Coast, growing metro areas of Austin and San Antonio plus a labor market that is among the most cost-effective in the country. Austin is showing signs of recovery from the high-tech collapse, while San Antonio is flexing its muscles with the Toyota site, SBC’s expansion and the PGA project. Satellite cities such as Boerne, Dripping Springs, Seguin and San Marcos are exploding, while at the same time learning to cope with rapid growth pains.

We believe current trends should continue through 2005, though “cashing in the chips” might be a wise decision for landowners in certain areas whose land is a significant family asset. It would be our recommendation that those landowners, particularly ones in areas that have seen the most dramatic recent increases, to shift their gain into lands a little “further out” from metro areas and wait for the next “wave” of appreciation.

There are many exceptions to this report, and prices within an area can vary tremendously depending upon factors already mentioned. We welcome new factual data and your opinions and encourage you to stop by and visit our new office in The Falls, several blocks east of South Main behind Beall’s. We hope you will consider our professional services if the need arises and wish you and your family a safe and bountiful 2005 and beyond.