Territory Review 2006

Southwest Texas showed substantial gains, with recreational and hunting parcels leading the way.A strong value surge occurred in the Rocksprings area, with prices jumping seemingly overnight for 2,500 acre tracts from $450/acre in 2004 to $650/acre, on average, throughout 2005.KinneyCounty saw several sizable sales out in the Tularosa Road area in the $425/acre range, with subdivided parcels moving for $650/acre or more in the 500 acre range.Asking prices along Highway 90 between Uvalde and Brackettville have soared over $1,000/acre, but there are no sales to confirm any justification of that level of optimism.Live water ranches, though scarce, on major creek or river, were fetching well over $1,500/acre in the NuecesCanyon.A ranch on Bullhead Creek near Vance traded for over $3,000/acre.The FrioCanyon saw a couple of sizable river sales of over $5,000/acre, with strong flowing creek ranches topping $2,500/acre in several instances.The Uvalde area appears to have reached a value spike of $3,000/acre for river properties, $2,000/acre for creeks and $1,000/acre for non-water parcels.Further west, these numbers decline to about half of above, while KimbleCounty is similar to Uvalde in all property types.An 828 acre ranch on big flowing Johnson Fork Creek near Segovia topped $3,500/acre, but at the same time, there were a couple of sales on the N. Llano River west of Junction for less than $2,000/acre.

The Western Hill Country of Kerr, Real, Bandera and MedinaCounties plowed forward with appreciation rates ranging from 15% to 25%.There were several sales in BanderaCounty of 2,000+ acre creek/spring ranches topping $2,000/acre, with asking prices now approaching $4,000/acre on heavy water places with substantial size.We participated in the sale of the 1,000 acre Greystone Ranch on Turtle Creek south of Kerrville for $5,000/acre.We saw non-water tracts in MedinaCounty top $1,000/acre for the most part, with asking prices on Hondo and Seco Creeks moving over $2,000/acre.A 1,200 acre tract near Pipe Creek languished on the market for $2,100/acre, though its configuration challenges the development market.At the same time, several 100 to 300 acre tracts on strong creeks in the same area sold for over $5,000/acre.We began to see some real separation between ranches with trickling springs and creeks, and those with high-volume flow with unique features such as waterfalls, swimming holes, cypress trees and rock formations.The former showed definite price limitations, while the latter category showed few or none.GuadalupeRiver tracts above Kerrville have topped $10,000/acre or more, and those near Comfort approached that level.The SabinalCanyon showed a good surge, with smaller river properties hitting the magical $10K mark, though larger parcels downstream of Utopia still hung in the $2,000/acre zone.

The Central and Eastern Hill Country again boggled the mind with Telluride-like prices and large sales dominating the headlines.KendallCounty, in particular, had some 50 to 150 acre creek sales in the JoshuaCreek valley hitting the $15,000/acre mark.Surprisingly, some GuadalupeRiver parcels were shopped hard at $10,000/acre with no takers, though less-fashionable school districts proved to be somewhat of a stigma to the buying public.A 160 acre parcel with extraordinary water on the upper BlancoRiver sold for $9,400/acre, with some other area sales checking in at similar levels, though all had outstanding natural water features.Those with no water flow traded for up to the $4,000/acre range in northern Kendall and southern Gillespie Counties.

Blanco County again showed sharp gains, particularly along the US 281 corridor, though remote parts of the county found some tracts with flowing water still available for less than $3,000/acre.The PedernalesRiver saw transactions topping $6,000/acre, and a significant transaction east of Johnson City was reported to exceed $8,500/acre.Generally, the closer to Austin, the higher the price, with the 45 minute drive time from the State Capitol showing up as a benchmark for value.Sales for 25 acre tracts were brisk, with the average price hovering around $8,000/acre.A sale of about 165 acres on a live creek in the range of $4,600/acre near Johnson City was reported.The Wimberley area continued on its torrid pace, with a value leap of about 20% for the year, though Dripping Springs slowed a little, possibly due to a moratorium on development in the immediate area.A significant sale of 800 acres on Onion Creek near Driftwood logged in at over $10,000/acre, while a 250 acre parcel on Gatlin Creek between Dripping Springs and Wimberley was reported at near $9,000/acre.ComalCounty spiked, with several 150 acre sales verified at $8,000+/acre.A sale of a 2,700 acre parcel between New Braunfels and CanyonLake was reported in the $6,700/acre range.Another sale of 1,000 acre on I-35 near New Braunfels was verified at $8,500/acre, with no utilities yet committed to the site.Blackland south and east of I-35 could still be had for $2,000/acre or less, though the possibility of major highways passing thru has created a recent wave of activity spilling into 2006.

The Inland Plains area showed a dramatic surge in 2005, with $1,500/acre becoming the benchmark for wooded parcels.This number continues to rise into 2006.The record appreciation rate is estimated at 25% for the year, and this appears to be running the same course into 2006.A sale of 500 acres on the GuadalupeRiver east of Gonzales was facilitated by our office at $1,950/acre with a pinch of minerals.A sale of 150 acres on a live creek near Smiley is verified at $2,650/acre, though improvements were nice and included an irrigation well.KarnesCounty moved up nicely, with sales on the San AntonioRiver reported at close to $2,000/acre, and brush land to the west pushing $1,500/acre.Minerals becoming harder and harder to get due to play east of Kenedy.The Seguin area has seen fragmentation to the point of no return, and rooftop developers are scouring the area for flat farmland to plunder and pillage with streets, utilities and crackerbox houses.GuadalupeCounty in general has topped $2,000/acre, with nothing on the GuadalupeRiver selling for less than $2,500/acre in 2005.DeWittCounty has also spiked, with river sales exceeding $2,000/acre.The driver is the Houston market, now beginning to realize the true value and usefulness of this land, coupled with the shorter drive time as opposed to the Hill Country.LavacaCounty saw some transactions on the LavacaRiver under the $2,000/acre mark, and there were still some wooded hunting parcels in the more remote areas available for less than $1,500/acre.This will change in 2006, and we fully expect to see the magic number hit $2,000/acre for tracts with oaks, decent access and at least a smidge of minerals.

Upper South Texas continues to steadily appreciate, with WilsonCounty becoming a hot spot due to residential growth centered around Floresville.Wooded land was hard to come by, as developers are snapping it up as quicky as it hits the marketplace.Open farmland showed appeal for subdividers, with strong demand for 10 to 30 acre tracts within 30 minutes of San Antonio.Few large tracts changed hands for less than $1,500/acre.A sale of 400 acres just west of Floresville hit $1,700/acre, and a 750 acre parcel on the San AntonioRiver to the southeast checked in at $1,400/acre.AtascosaCounty, crazed by the nearby Toyota plant, has hit the ceiling, with sales of significant parcels topping the $5,000/acre mark.Southern Atascosa still offered select tracts for less than $1,600/acre, but the wooded sites with good access and minerals are headed for the $2,000/acre benchmark in 2006.MedinaCounty has awakened, with the driver being San Antonio commuters looking to raise a horse and/or shoot a deer.Yancey, once a bargain hunter’s haven, saw average prices for 500 acre parcels climb to $1,500/acre with no end in sight.Unfortunately, many small tract fragmenters have entered that area with their carving knives sharpened.Though this activity drives prices up, it also tends to drive perceived recreational value down, thus it becomes a double-edged sword for the savvy investor/user.

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.