Territory Review 2008

Southwest Texascontinued to slow down, activity-wise, from a peak in late 2006, though prices across the board held their own.ValVerdeCounty saw a desert-type 6,600 acres sell for $445/acre.Kinney and EdwardsCounty began to enter a significant slowdown, with signs of prices weakening on marginal ranches toward the end of the year.This trend has continued into early 2009 in most areas.This office participated in a 6,000 acre sale north of CartaValley for $645/acre to a large tract developer. We have seen asking prices in this area top out at over $1,000/acre for 1,000 acre parcels, but the sales activity is slow to nill, and price competition is becoming aggressive in early 2009.This office also participated in sale of 1,800 acres with many springs, bottomland, major creek near Barksdale for $2,200/acre which closed in first week of 2009, and nearby offerings with even bigger water were asking in excess of $3,000/acre, but not getting much attention after the “new wore off.”UvaldeCounty saw decent sales activity, including a 5,000 acre, transition country conservation tract north of Uvalde for $920/acre.There was a fair amount of interest in another, 7,000 acre conservation tract nearby in the $1,000/acre range late in the year.We saw asking prices on the NuecesRiver top $3,000/acre in almost all locations, though this office continues to offer an 8,450 conservation tract for $1,695/acre with spotty interest.The City of San Antonio, Edwards Aquifer Authority, and other interested water protection entities have been placing thousands of acres in Uvalde and MedinaCounty under Conservation Easements in the past couple of years by purchasing development rights in the name of protecting water quality.This is a classic, win-win deal for the ranchers and the general public, and the current success of the programs will likely spur more programs (and $) for the now-interested local ranching segments.Uvalde continues to bustle, becoming a vibrant trade center for the area.This area in general remains highly desirable, yet affordable, and should be carefully considered by anyone looking to “land bank” funds for the future, while enjoying quality hunting and ranching in the interim.

The Western Hill Country also continued to slow down in activity, with signs of weakening prices clearly evident in early 2009.As in other areas, tracts with large volume or exotic-type water seem to continue to increase in value at a steady pace, while the average to below average land tracts owned by needy sellers have begun to retreat, with price competition beginning to become commonplace.Many sellers refuse to bend, and they are learning that most buyers are expecting “deals,” not willing to pay fair market value (except for premier properties).We saw a sale in southern RealCounty of a marginal water property of 1,300 acres for $1,900/acre (near Reagan Wells).A more improved 1,250 acres near Leakey traded for $3,175/acre, though I think it was an aberration left over from the waning giddiness of 2007.We saw some of that residual in most areas across the board in 2008, but it seems to have pretty much disappeared in mid-2009.KimbleCounty seems to have hit the wall with cedar-covered hills topping out at $2,000/acre, and retreating slightly in early 2009.This office participated in two live water ranch sales – one in eastern KimbleCounty, for $3,500/acre for 775 acres – another in western GillespieCounty near Harper, for $4,050/acre for 663 acres.This area is now plagued by the prospect of large electric transmission lines passing thru pristine areas, contributing to loss of wilderness, and possibly devaluing the land.MasonCounty continued to gain momentum and buck trends, with prices continuing to rise into early 2009, as this highly desirable part of the Hill Country begins to get the attention it deserves (which may actually be its undoing).Menard saw a non-live water sale of 2,100 acres for $2,000/acre, which is a new benchmark (the ranch is above average caliber and in excellent condition).Again, as with others, this area is seeing continued appreciation in the top 25% of quality ranches, weakening in the bottom 25%, and the mid-range is holding pretty steady.The distance from Austin & SA is daunting to many, who simply don’t care to drive 2 hours to and back from a recreational ranch in this age of precious time.Those of us who care to (present company included) reap the rewards of solitude, clean water, uncluttered views and financial value.

The Central and Eastern Hill Country saw a major slowdown in sales activity in 2008, though prices seem to be holding steady into early 2009.With live water prices in the $10,000 to $15,000/acre range becoming commonplace, coupled with a looming economic crisis, buyers were not as willing to pay full price, and began to take the mindset of “hey, let’s wait for a deal.”Many sellers drew lines in the sand, and held firm on trying to achieve 2007 prices in 2008, though the needy ones were forced to retreat to generate serious activity.In KendallCounty, we saw some non-live water ranches trade for around $6,000/acre, and some smaller river tracts fetch north of $20,000/acre, though the level of activity was definitely off from 2007.A Kerr County 1,500 acres on Johnson Creek near Mt. Home was offered all year long for $4,500/acre with no takers (also discussed in our previous Territory Review).LlanoCounty slowed to a crawl in 2008, values held steady.BlancoCounty saw a nice 387 acres on pavement with small but nice lake trade for $5,500/acre late in the year.A nice 516 acres was shopped hard for $9,000/acre with no takers, while a nearby 450 acres was exposed for $7,500/acre with same results.This region seems to be less affected by the current doldrums than others.We believe this is due to its excellent proximity to the populated areas of Austin, SA and the HighlandLakes.There are now a couple of million people within a one hour driving distance of Blanco, coming from all sides!Fredericksburg continues to amaze. . . new shops and restaurants. . . beautiful people. . .this all bodes well for the husband who wishes to own land near that unique community!Mom will have plenty of interesting things to do while the guys do their thing out in the sticks.As GillespieCounty live water prices topped the $10,000/acre mark, the economy sputtered, and sales activity tanked.A sale of $13,000/acre for 160 acres on the PedernalesRiver was reported, and a 1,300 acre tract west of town on strong creek traded for $5,800/acre, and is now offered for $10,000/acre on resale.A 1,200 acre tract on Crabapple Creek, which has been offered for several years now, lowered the asking price to $7,300/acre.This is an example of a seller with unrealistic expectations – who was hoping for a 2006-mindset buyer in a 2008 economy – finally reading the handwriting on the wall.Expect a sale of this tract in late 2009 for less than asking price, but well within market parameters, which will provide a benchmark for the next couple of years.HaysCounty has continued its run almost unabated into early 2009.The proximity to Austin, coupled with the large number of folks who have settled in communities such as Dripping Springs, Wimberley and Kyle, continues to foster a climate of desirability and optimism, causing land values to creep upward even more in 2008.Expect a leveling in 2009, and keep an eye on the 193 acre Mt. Gainor Farm offered by this firm, as we expect a benchmark sale of it during the summer sales season, particularly if creek flow comes back.Regulators and environmental groups are becoming more shrill close to Austin, and may contribute to leveling off of land values in this zone due to increased ability to regulate development.This is not a bad thing, as long as landowners are adequately compensated for any losses in property rights.

The Inland Plains also saw a nosedive in sales activity, as land and ranch brokers got to catch up on their sleep from the frenzied 5 years previous.This office participated in sale of 170 acres on the San MarcosRiver at Luling for $4,700/acre with partial minerals, as well as 246 extra-nice acres near Smiley, in GonzalesCounty, for $3,620/acre with partial minerals.As with other areas, however, many of these area sellers refused to budge from their 2007 expectations, and most of them still own the land they were trying to sell.Several Guadalupe and San MarcosRiver sales in the $4,500/acre to $5,000/acrerange were observed, and we believe that $5,000/acre is “the wall” for river properties in this area for the foreseeable future.As always, properties with good access, clean shape and average to good condition will command more than marginal ones.The “water wars” over the Carrizo Aquifer have slipped into the courts or mediation, with outcomes yet to be decided.Thirsty metropolitan areas are aggressively pursuing water development and marketing business models, but are being challenged by locals fearful of resource exploitation, and rightly so.Ironically, several large landowners have cut private deals with the water companies, and this may allow them to proceed with the exploitation while skirting around the organized, smaller landowner groups.We see asking prices in GonzalesCounty rarely below $3,000/acre, with corresponding slow sales activity.This is very similar to LavacaCounty as well.GuadalupeCounty kept a steady pace thru most of 2008, but now shows signs of the times with decreased activity, and failed/stalled developments.We see asking prices rarely less than $3,000/acre in this zone, depending upon location and amenities, and are finding that buyers are willing to pay over $4,000/acre for the top 25% of land having many oaks, paved frontage and clean shape.KarnesCounty slowed to a crawl, as average asking prices topped $2,500/acre.For sellers with quality merchandise, it’s still a good time to sell, but price your offering competitively from the get-go, keep it looking its Sunday best, and don’t try to hang on to too many minerals or water rights if you want to have a successful closing.

The Upper South Texas Region saw some stout sales in 2008, but a marked decrease in sales activity.We believe values actually topped out in this zone during the early part of the year, and are now retreating across the board, except for the best of the best, which is holding steady at around $2,500/acre.A sale in eastern FrioCounty of average, brushy hunting land checked in at a whopping $2,775/acre for 1,700 acres.Other reported sales include 2,865 acres of average brushy land with liveoaks and high fencing for $2,375/acre in western Medina County, as well as a sale of 1,142 acres under Conservation Easement on Hondo Creek (very seasonal in this area) for $1,850/acre.The hard-shopped Rafter R, in SW Frio County, saw little activity throughout the year while offered for $2,550/acre.WilsonCounty saw the same decrease in activity as most others, with several small developments either stalling out or totally failing.1,000 acre tracts offered for $3,500/acre to $4,500/acre found no takers, and these have retreated on their asking prices in early 2009.This is a trend seen across the region. . .a price “wall” has been found in all categories.Above this price level, activity will not occur unless the property possesses highly unusual, desirable attributes.In WilsonCounty, this number appears to be $5,000/acre.

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.


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Culver/LANDTX, Inc.
PO Box 860
954 San Antonio St.
Mason, TX 76856

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