Territory Review 2007

Southwest Texas continued the area-wide upward trend, with Val Verde, Kinney and EdwardsCounties posting strong gains.This firm participated in a mind-boggling sale and resale of 6,642 acres on LakeAmistad, with first sale occurring in Jan., 2006, at $685/acre, and the second in September, 2006, at $1,350/acre.Another LakeAmistad sale of 1,200 acres topped the $2,000/acre mark, we are told.A highly improved 5,400 acres just NE of Lake Amistad was taken down for $700/acre, and put back on the market for twice that amount.Land trading is rampant in this area, with retail buyers coming out on the short end of the stick due to their inexperience and lack of qualified broker guidance and quick-striking ability.Further north, EdwardsCounty saw several transactions approach $1,000/acre, and this firm participated in a sale on the NorthLlanoRiver west of Junction for $2,200/acre.Kimble and UvaldeCounties are over $1,000/acre for even the most marginal land, with primo live water inventory fetching as much as $3,500/acre.Further west, Comstock, Langtry and Dryden are appreciating, as many investors seem to believe that $150/acre land will double in value more quickly than $5,000/acre land much closer in to population centers.The Devil’s River area has seen the 14,000 acre Jarret Ranch be shopped at over $2,000/acre with no takers, with nearby non-water inventory being offered at 20% of that price.

The Western Hill Country of Kerr, Bandera, Real and MedinaCounties surged ahead as typical of the region, with Medina showing an overall appreciation of over 25% for the year.This number is slightly lower for the rest of this zone, but, on the overall, this area remains highly desirable for recreational buyers from the San Antonio area as well as Mexican Nationals.Bandera and MedinaCounties are seeing many ranchette-type subdivisions of varying tract sizes, and a sale near Pipe Creek of 1,240 acres in the $2,000/acre range is currently being offered in 300 acre parcels at around $4,000/acre.Live water tracts continued to escalate, and a significant sale of 1,800 acres on the MedinaRiver near Pipe Creek checked in at around $8,500/acre and is currently being developed into smaller residential plots.As the outer reaches of San Antonio expand, higher density developments prevail, and the ranchers who have managed to hold on and put up with the headaches of surrounding development are cashing in their chips, and rightly so.It is the funds from this group of sellers that fuels land markets further out from the major population centers, and it just goes on and on and on.The further reaches of this region saw marginal properties top the $2,000/acre mark, and the larger tracts with big flowing creeks and strong springs are pushing $10,000/acre in the right locations.

The Central and Eastern Hill Country continued its torrid pace of Aspen-like prices becoming the norm.A number of live water sales in KendallCounty checked in at $10,000/acre or more, with one sale on the GuadalupeRiver topping $15,000/acre.The cheapest land in KendallCounty was priced at $4,800/acre with poor access and other major negatives.This firm participated in several major sales in BlancoCounty, ranging from 563 acres on the PedernalesRiver in January, 2006, for $6,600/acre to the benchmark Cuatro Hermanas Ranch sale of 732 acres on upper Onion Creek for almost $14,000/acre in Sept., 2006.The least expensive land in this area was a 1,050 acre parcel that sold for about $3,300/acre just north of CanyonLake in ComalCounty in late 2006.This firm was involved in resales of 150 acre parcels just east of New Braunfels that averaged $8,000/acre out of a 465 acre parent tract.GillespieCounty spiraled out of sight, as sizzling Fredericksburg has become a “must-own” location for out of state buyers.The Campbell Ranch of 1,200 acres sat on the market all year for $7,950/acre, though access issues proved to be burdensome to marketability.Sales in the Enchanted Rock area were brisk in the $4,500/acre range, and a 250 acre tract on the Little Llano River fetched $4,600/acre through this firm.LlanoCounty saw prices on marginal land top $3,000/acre, and there were reports of significant sales on the LlanoRiver approaching $10,000/acre.MasonCounty has become a desirable address for many “suburban” land sellers looking to escape the ever-encroaching rooftops, though land in that county topped the $2,000/acre barrier in the early part of the year.The lowest big live water sale this office is aware of was 1,200 acres on the San Saba River for $2,300/acre.This same sight was cleaned up a little and offered again for $3,800/acre.The landmark sale of the year occurred in BurnetCounty of the 21,000 acre Goodrich Ranch on LakeBuchanan with miles of live creeks.This site is spectacular, but marginally accessed with much rough country, and fetched about $3,300/acre according to sources.It has since been broken up into large tracts of 1,000 to 5,000 acres with asking prices in the range of $5,000/acre on average.5,000 acre Rancho San Miguel in far northern BlancoCounty traded for over $3,000/acre.

The Inland Plains area showed perhaps the most striking gains of our territory, leaping from the 2005 benchmark of $1,500/acre to a 2006 median of close to $2,500/acre.This represents an increase of 200% in the last 3 years!GonzalesCounty continues to catch the eye of investors and users alike due to its excellent proximity to Houston, Austin, San Antonio and the GulfCoast.This land is pretty to look at, will produce quality beef and wildlife and possesses mineral and groundwater potential.A sale of 100 acres with no improvements on a major creek near Smiley is confirmed at $2,650/acre.The lowest sales included 900 acres in southern GonzalesCounty for $1,875/acre, and a rough 800 acres near Ottine for $1,850/acre.Some smaller San Marcos and GuadalupeRiver sales checked in at $4,000/acre.GoliadCounty hit the $2,000/acre mark as its benchmark, though the more remote locations to the south are far below that.Minerals are scarce in Goliad, Karnes and VictoriaCounties, and oak trees and degree of refinement are major value contributors.DeWittCounty saw average 200 acre parcels reach the $2,000/acre level, with river tracts 50% higher or more.LavacaCounty, too, topped the $2,000/acre mark for average land, though mineral availability is increasingly scarce due to gas play.Even long-suffering KarnesCounty approached the $2,000/acre mark, and a significant transaction in early 2007 of over 3,000 acres logged in at $1,850/acre.As always, presence of oak trees, public road access, enough brush to hold deer and ample surface water are prime value additions.Parcels lacking these attributes are still docked on price by the buying public, and marginal improvements are found to add little to no value.

Upper South Texas remains on a steady, uphill course, with WilsonCounty continuing its torrid trend due to proximity to San Antonio, as Floresville has become a bedroom community of sorts.Subdividers scour the countryside for parcels with road frontage, hungry to carve them into acreage tracts.Several smaller (150 acre) farms sold in the $2,500/acre range.AtascosaCounty saw several significant transactions of well over $2,000/acre, while development-type parcels closer to the Toyota plant spiraled to well over $5,000/acre.The southern part of MedinaCounty has awakened, due to good hunting + proximity to SA for recreational buyers.A MedinaRiver sale of 750 acres at $7,000/acre closed in early 2007.Even marginal parcels of 250+ acres reached the $2,000/acre level, with presence of creek or river water driving that up yet another 50% or more.A problem of this area is the widespread presence of low-end, unrestricted residential subdivisions, and the accompanying visual and social pollution they bring.Even Yancey has seen its share of mobile home traffic recently, much to the chagrin of some of the more substantial landowners in the area.Frio County saw a highly improved 1,500 acres with minerals sell for $2,600/acre, then be put back on the market for 40% more!A highly improved UvaldeCounty ranch on the SabinalRiver (3,300 acres) sold and closed for over $2,200/acre.A good 9,000 acre farm/ranch on the FrioRiver adjoining closed at about $1,500/acre as well, with the river portion put back on the market for $2,500/acre.Excellent agricultural and recreational features will continue to support appreciation for this area, which is still the closest “brush country” to San Antonio.With the proliferation of superior whitetail genetics under high fence, and the accompanying live market for breeder bucks and does, one doesn’t have to be in the “golden triangle” of South Texas anymore to enjoy hunting trophy whitetails.

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.