Territory Review 2013

Southwest Texas continues to enjoy solid sales activity through June, 2013. Several large ranches that had been on the market for over two years finally found buyers in 2012 – Spring 2013. These properties had slowly lowered their asking prices over the years until “the bottom was finally found.” Shockingly, the long-offered 8,400 acre 19 Mile Crossing Ranch on the Nueces River NW of Uvalde sold for a reported $550/acre in Spring, 2013. This ranch had been shopped at higher prices off and on for several years prior to this transaction, including a long unsuccessful stint with this office. The ranch is encumbered with a fairly strict Conservation Easement, combined with river frontage exposed to highway and neighbors, being the reasons for the difficult sales process. Nearby, the long-shopped, 2,894 acre “Moos” ranch on Hwy. 55 N of Uvalde sold for a reported $1,425/acre after being on the market almost 4 years. This is average land on a highway with no distinguishing features. To the west, the 17,000 acre 4 Aces Ranch finally sold after a 2+ year market exposure, for a staggering (reported) $2,539/acre. The accuracy of that number could be questionable, as selling broker is not discussing financial terms of the transaction, and posted the sale on landsoftexas.com as being full asking price. This ranch is highly improved, has highway frontage and offers several miles of Grade A live water with dams.

To the west, we saw The Nature Conservancy finally unload the bulk of their Devil’s River inventory in sales of 40,000+ acres with most of the river frontage at $525/acre with Conservation Easement in place, and 20,000 acres not on river without Conservation Easement for $250/acre, reportedly. Another sale on the Devil’s River of a smaller, 4,300 acre parcel was reported in range of $700/acre, so a fairly wide value range is demonstrated in this very pristine and protected area. There was not much sales activity reported in the Upper Nueces Canyon during the current reporting period, and several live water offerings continue to get shopworn at $5,000/acre and up. We are seeing dryland in the Uvalde/Kinney/Val Verde area move in the range of $300 - $1,500/acre, depending upon location, access and overall quality. A sale of a remote hunting ranch of 7,200 acres near Langtry checked in at $322/acre, while an awesome 4,000 acres on Pinto Creek (4 miles frontage) near Brackettville was only on the market for 49 days to fetch the notably low price of $1,395/acre. Moving further east, we saw the long-offered, 3,700 acre Blanco Creek Ranch, highly improved on the Sabinal River, bring a land-only value of about $2,500/acre, after almost 3 years of market exposure. This is regarded as a trophy-type ranch, top of the line.

Activity in the Lake Amistad area continues to cool off after a sizzling run from 2005 -2010, with no major area sales reported. We saw large lakefront tracts jump from $600/acre to $1,500/acre during that period. The 6,600 acres with 10 miles of Lake Amistad Devil’s River Arm continues to be offered at $2,450/acre with no takers, and some large river properties to the west languish in the $850/acre range. The Rocksprings area saw a couple of dryland sales in the range of $1,000 - $1,200/acre for 1,500 acres, while prices in nearby Sutton County continue to decline on the overall, with average land now under $1,000/acre, never with minerals.

Buyers continue to be quality-sensitive, and show that they are willing to pay the price for top quality offerings, but are looking for bargains on anything not regarded as top shelf. Sales activity remains steady into mid-2013, as this interesting area begins to get scrutinized more by cash-flush Eagle Ford and Permian Basin oil money, looking for a little better quality of life and outdoors fun than what the oil patch offers anymore. Overall, the area’s relatively low prices, coupled with proximity to San Antonio, Eagle Ford and Permian Basin dough, brand it as desirable ongoing, for those interested in awesome natural features and long term value appreciation potential. This office is definitely on the SW Texas bandwagon as far as the long term goes. We see pristine rivers and creeks, beautiful scenic hills and valleys, abundant wildlife and groundwater as drivers for purchasing prospects.

The City of San Antonio continues to raise funds to help preserve the Edwards Aquifer, the primary water source for the nation’s 7th largest city, and has acquired fee simple land and Conservation Easements now protecting hundreds of thousands of acres in this pristine zone. Look for more of this type activity in the future, as ranchers begin to realize that conservation is vital, and the money offered for development rights is often substantial, allowing them to remain in the ranching business instead of having to sell off their land holdings to survive. Yes, SW Texas will be a vibrant area for the foreseeable future, and yes, there will be occasional opportunities for bargains. But, for the most part, I think you are going to see sellers hang tough and hold out for top dollar, not minding the exceptionally long market exposure periods so much to realize what they believe is best value.

The Western and Northern Hill Country showed much the same patterns as SW Texas in late 2012 – early 2013, and this office participated in a number of meaningful transactions worth discussing. The Oak Knoll Ranch, offered by this office for several years, in western Kerr County “Divide” country, was sold in two parcels. The 806 acre western pasture fetched $1,900/acre, and featured high fencing, hwy. frontage, interior paved road and exquisite, manicured country. The eastern pasture sold as 2,107 acres, with similar features to the western, and fetched $1,975/acre in late 2012. Both tracts are regarded as above average for the area. Other area offerings continue to linger at $1,800/acre - $2,300/acre. Quality is a driver here, and there is much marginal country available at the low end of the price scale, and it’s not moving unless deeply discounted. This area is getting some Eagle Ford lookers and closers, but draws much more from the Permian Basin area due to proximity, and even gets some of the Barnett Shale money from up north from time to time.

Kimble County slowed down from recent hot run, with most larger listings either sold prior to 2012 or overpriced, but Mason County saw the largest known ranch transaction ever, the sale of the fabulous and highly improved 3,308 acre Cliff Lakes Ranch, for a land-only value of about $3,700/acre, further solidifying Mason’s mystique and desirability. This office was listing agency of the transaction, which occurred in late summer of 2012. The Mason area continues to sizzle, with numerous smaller and mid-range transactions during this reporting period. For average to good quality land on pavement, we see continued appreciation in Mason County for the short term. Dryland is selling in the $3,500/acre range, and small river tracts consistently top $10,000/acre. There are isolated offerings under $2,500/acre on occasion. This oasis of spring water, good soils, abundant groundwater, unreal scenery and geology, coupled with excellent quality of life, will serve as a magnet for visionaries seeking a better life, out of the reach of Austin and San Antonio. The Culver family was drawn by that magnet, and now lives happily in rural Mason County with twin sons going into 3rd grade next year. Go Punchers!

To the north, McCulloch County saw several significant transactions in the period, including ones orchestrated by this office. The 1,354 acre Pecan Creek Ranch, being an above average parcel on pavement near Brady, sold for $1,843/acre in late 2012. The 1,505 acre Acorn Valley Ranch fetched $1,420/acre after being shopped hard for 18 months by this office at $1,750/acre. This ranch has some nice views of the nearby Brady Mts., lots of liveoaks all over, and excellent all-around hunting. The buyer was a family looking for “bang for the buck” hunting, and they found it, in perhaps the most astute area purchase we know of during the reporting period. The above PCR sale was a neighbor purchase, and the offering received little attention when shopped at $2,350/acre. This office was listing agency of the 332 acres in N McCulloch County, offered at $2,750/acre, sold in fall of 2012 for $2,350/acre. It included ½ mile of mostly deep Colorado River frontage, along with a new 5 acre lake.

In Menard County, we are seeing a trend of retreating values in average to below average properties. A sale of 4,700 acres on US 83 just N of Menard, of an above average working ranch, checked in at $1,350/acre. Several years ago, there would have been an expectation of over $1,500/acre for a similar offering. Another sale in the eastern portion of the county checked in with 1,382 acres fetching $1,375/acre, and was on the market for about 2 years, though it was encumbered with a troublesome water rights contract with the City of San Angelo. Both of these sales included some mineral rights to buyers. Larger tracts on the San Saba River have been shopped for $3,000 - $3,750/acre with little success. Troubled river parcels have recently lowered asking prices to less than $3,000/acre. These often have poor access, or neighbor easements thru, or outages, resulting in difficulty in attracting prospects capable of spending in the millions of $. Again, this speaks to the overall matter of buyers becoming more discriminating, and refusing to pay premium price for non-premium offerings with issues.

The western and northern portion of this region suffers from terrible, long term drought, and the result has been the loss of many desirable hardwood trees, including oaks, elm and pecans. These conditions put financial stress on land-poor ranchers, some of whom are forced to sell. The attempted auction of the 34,000 acre Door Key Ranch, near San Angelo, only attracted bids on the large parcels in the range of $800/acre with some minerals, a major disappointment to sellers, but this place has been mostly cleared for grazing. This is not the “look” the current crop of recreational ranch buyers is looking for, and the cagey old ranchers are certainly not going to pay recreational prices at a land auction!

The Central, Eastern and Southern Hill Country saw interesting sales on both the high and the low side of the market. This dynamo continues to deal with the pressures of sizzling growth and resource management, and large tracts are becoming scarcer each passing year. Last year, we reported that the fabulous Sandstone Mountain Ranch, 2,528 acres in Llano County, was under contract. The deal closed with a land-only value of $5,950/acre. This property included two large lakes and Llano River frontage, as well as frontage on Hwy. 71 between Llano and Horseshoe Bay. This is regarded as a benchmark sale on the high side by this observer, though the ranch can be classified as “trophy” for the area. Another area sale of 665 acres in far NW Blanco County on White Creek checked in at $5,750/acre for the land only. This tract included paved hwy. frontage, average improvements, live water and above average land. A couple of smaller (150 – 200 acre) sales occurred in the same area, with good live water, for about $10,000/acre. This points out the fact that some of the smaller, more affordable, high quality offerings are moving at much higher prices than they did even in irrational 2006!

We saw a couple of 1,000 acre, dryland, average ranches sell in Llano County during the period, in the range of $3,500/acre. This office was listing agency of Enchanting Springs Ranch, located on the Gillespie/Llano county line, near Enchanted Rock, which sold in June, 2013, for $5,000/acre. This ranch has hwy. frontage, nice cabin, great views of Enchanted Rock and other area outcrops. We also have seen a number of Llano dryland offerings flounder at $4,000 - $5,000/acre for a couple of years. It now appears that the “bottom” in Llano County is $3,000/acre, so if you can find it for less than that, take it down!

This office was listing agency in the sale of the 1,062 acre Oak Mesa Ranch, in Blanco County near Cypress Mill on pavement, for $3,900/acre. This was the lowest land-only sale in the area for quite some time. The property is bland and with odd shape, and is mostly void of trees, thus the marketing challenge. It was on the market with this office and owner for several years before selling. The sprawling, 3,600 acre Robinson Ranch on Cypress Creek recently lowered asking price to $7,200/acre, still with no takers as of this writing. Moving to the south and west, Gillespie County saw sales activity back off slightly in the period, with no major transactions to report. 927 acres on heavy-flowing Squaw Creek in NW Gillespie recently lowered price to $5,450/acre, and remains on the market. This office participated in the sale of 99 acres on the Pedernales River about 15 miles W of Fredericksburg, which checked in at $7,500/acre. This offering included 1,000’ of river frontage, had easement access, and was otherwise somewhat bland.

The Stonewall area saw several solid transactions in the period, including the sale of 1,386 acres out of Redstone Ranch, with large spring and other unique features, for $4,800/acre, land only. This was regarded as slightly below market value. This offering was never marketed as a “stand alone” part of the whole Redstone package. It is this observer’s opinion that, if it had, it would have fetched perhaps 10% more. Other smaller sales occurred in the immediate vicinity of Redstone/LBJ Parks, including 323 acres on the Pedernales River for land-only value of $7,750/acre. This was a manicured showplace with irrigation, but a county road separated the main body of the ranch from the river. Nearby, two smaller sales out of Redstone, being 147 & 62 acres respectively, sold for land-only values of $6,500/acre during the period. Both had paved frontage and big views, one had nice fields and a cool German compound.

Moving south, this office was listing agency in the sale of the Stieler Springs Ranch, being 305 acres about 6 miles N of Comfort, for $5,250/acre. This offering featured source springs putting out about 50 gpm on site, and land that is otherwise average to above average, with a touch of oak wilt. This ranch was on the market for about 1.5 years, and was originally listed for $5,950/acre. The neighboring Water Valley (280 acres @ $4,975/acre) and Owl Creek (879 acres @ $5,950/acre) remain unsold due to negative influence of a large electric transmission line. A little to the E, the resale of 480 acres near Luckenbach checked in at $7,000/acre for the land only. This ranch is high fenced and stocked with exotics, and has a cypress lined creek (not permanent), and the sale was regarded as benchmark on the high side by this observer. The ranch had been shopped hard for two years prior to the sale.

The Inland Plains and Upper South Texas are two areas we have long been active in, but have now chosen to abandon for a couple of reasons. The Culver family relocation to Mason from Boerne is a major reason, and the bizarre land markets situation created by the proliferation of oil and gas production in the Eagle Ford Shale is secondary. We have seen the market for land surface in that zone practically disappear, as minerals are now worth 10 to 20 times the value of the surface, and quality of life has degenerated to abysmal, thus no one wants to live there, either buyers or sellers. Many transactions are neighbor to neighbor purchases, or neighbor to banker, or neighbor to oil company. . . .etc.

In the period, we saw values of above average to premium land hold value or increase, on average, in our territory. We also saw marginal to poor quality offerings lose value. This is the stamp of the discriminating buyer, and exactly what we predicted in our last review. There was an unprecedented flurry in sales activity between the last Presidential Election and the end of the year. This lucky and blessed broker had about $63M in sales in 2012, and about half of it occurred during those two months!

There is no reason to expect that the trend will change in late 2013 and early 2014, so if you are a willing seller, expect longer market exposure times if you’re trying to knock one out of the park, but also expect a solid stream of lookers/buyers if you have above average quality land at fair market value or slightly below. Buyers, continue to be picky, and sellers, continue to be wise and avoid becoming needy. As you know, free consulting is available through this office, and we welcome your inquiries, as I specialize in representing buyers and sellers of fine Texas rural real estate.

As always, there are many exceptions to this report, and some sales have occurred which we have not reported in the article due to space limitation, plain ignorance or confidentiality agreements. This report is not to be considered legal or financial advice, please consult professional specialists in those fields.

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 fine friends and peers who supply us with good information, and are committed to this ongoing private info project for years to come. You are welcome at our new office in Fredericksburg, or DC’s home office in Mason, at any time to share a cup of coffee, talk about land conservation and property rights, and check out our unique, team-oriented operation and awesome mapping services. We hope that you will consider any of our professional services if the need arises, and we wish you and your family a safe and bountiful 2013 and beyond. Thanks for your consideration. David E. Culver, Broker