This publication is sponsored and heavily supported by the phenomenal land professionals at the Grand Land Company. I am proud to be included in their ranks as a Realtor and land specialist.
Texas Land This Week.
The following information comes from LandWatch.com. The information is based on properties that are greater than 10 acres and which I refer to as ‘acreage properties’. This information is single source. Which means that this is NOT an exhaustive list of all properties available and sold everywhere in the Great State of Texas. Texas is a non-disclosure state and is therefore a Dark Market. This means that there are a great deal of data that are hidden, dispersed, not allowed to be shared publicly, or just plain unavailable. The following information is for reference and entertainment purposes only.
As of August 12, 2022 there were…
13,127 acreage properties listed as Available
1,229 acreage properties Under Contract
8 properties up for auction
Five counties with the most listings:
Grayson County - Texoma Region (279 listings)
Hunt County - Piney Woods North Region (271 listings)
Smith County - Dallas Prairies Region (225 listings)
Edwards County - Edwards Plateau West Region (219 listings)
Erath County - Cross Timbers Region (206 listings)
Price per acre trends for these five counties:
For the last 7 days there were…
642 new properties listed
5 new properties under contract
2 properties identified as Sold
Five counties with the most listings in the last 7 days:
Val Verde County - Edwards Plateau West Region (29 new listings)
Kaufman County - Dallas Prairie Region (26 new listings)
Menard County - Hill Country West Region (16 new listings)
Lampasas County - Hill Country North Region (13 new listings)
Burnet County - Highland Lakes Region (13 new listings)
Price Trends for these five counties:
News from the Front.
What buyers are saying:
Not in a hurry. Looking for the right deal. Very interested in the right property.
Analysis: Cash buyers with enough capital to purchase land are ready and anxious to buy property. The old-timers have been through this before. They believe that uncertain times are a time of good deals. These types of buyers are shrewd, patient, and won’t rush in.
What sellers are saying:
Scared. Ready to list before the market falls further.
Analysis. The tables have turned and the market is becoming more even in terms of buyer versus seller negotiating position. Seller price expectations are sticky to last year’s incredible bull market.
Important News.
Drought Continues. Climatologists say that there is 70% chance of La Niña continuing into the winter. If this happens, this would be a rare “triple dip” La Niña of three winters in a row. August 2022 ENSO update: Summer Nights
Inflation Continues. The July inflation report (CPI) headlined at 8.5% CPI Home : U.S. Bureau of Labor Statistics. The producer price index (PPI - Wholesale) came down to 9.8% (Producer Price Index Home : U.S. Bureau of Labor Statistics). The Fed continues to signal rate hikes through the year.
Senate Passes Inflation Reduction Act. Studies show it will have no impact on reducing inflation. I’ll venture a guess and say it is inflationary in nature. Senate Passes Inflation Reduction Act—Here’s What’s Next
There is still war in Ukraine.
The Big Blue Arrow (Comments on the Economy).
The economy is a big ballroom in Vegas, and The Players are seated at a large table. They squint, peer, and look around. They mumble nervously. The data are bad and not improving. The peasants are scared and becoming angry. The price of bread is rising.1 Some wonder aloud, ‘What should we do?’ There is much hand-wringing. Jaws clench. Teeth grind. The Players at the table wait for a sign and a savior. They want the good times back. Or, barring that, some hint of something definite. If only for a bit of clarity so that they can make a decision. But everything is sideways and confused. And they hope and wait for a miracle. Do they wait in vain?
Probably. Pray and Hope as one might, I am not optimistic that an Economic Jesus will fall from the sky and disco across any large bodies of water any time soon. Jerome Powell (chairman of the Board of Governers of the Federal Reserve) and his disciples at the Fed are NOT the saviors that you are hoping for. They are just as nervous and confused as the rest of us (despite attempts at appearances). They are, after all, The Players sitting at the head of the table. That is the bad news. The good(-ish) news: A semi-famous economist named Hyman Minsky once opined that with the insertion of Keynesian controls (attempts at control anyway) like managing money supply via the Federal Reserve and massive government action meant that long periods of inflation replaced depressions. This was back in the 1970’s and 1980’s, a time with its own peculiar, but perhaps similar, set of problems. (Ahem, it was also a time pretty good for land prices.) If Minsky is correct, perhaps the Terrible Thing that we are expecting is already here. Perhaps we live, right this second and in complete ignorance of the fact, through the Bad Times that we fear. Perhaps. And perhaps not. The humpty-dumpty pessimist would say that it could always get worse.
An old saying goes that generals fight the last war, they being blind to the realities of the new war. I find myself falling into this same trap. I keep expecting another 2008. Others say that, no, it is more like the 1970’s, or the 1930’s, or that one time the Dutch got all crazy about tulips. And I must remind myself that today is a different day, a different year, a different decade. Today’s economy, that Culture of Exchange, that peculiar energy that ebbs and flows around us everywhere and all the time, evolves just like culture and society evolve. So it is not the same economy that it was yesterday or last year or 15 years ago. It is fool-hearty to expect that it will all go down the same way that it did last time. The best that I or any of us can do, is look around, call a spade a spade, maybe spot a trend, and play the cards as they are dealt. None of us knows the future.
Speaking of calling things as they are… more and more talking heads are collapsing under the weight of truth and publicly making the call: we are in an Inflationary Recession. Otherwise known as Stagflation. Putting a name to a thing gives it definition. A name gives recognition. A special acknowledgement. The good rancher does not name his cattle because doing so confers a special status on the beast and therefore makes it difficult to slaughter when the time comes. And so a name is important psychologically for We, Human(s) but if you dig deep into the nitty-gritty Philosophy of Reality, a name doesn’t change a damned thing. The facts is the facts (sic). The conditions are the conditions. A tree fell in the forest regardless of whether a human heard the sound. The cow is still a cow regardless of whether you acknowledge her as Bessie or ‘that four-legged animal over there’. Let’s not even start on Schroedinger’s cat.
Trends. The current momentum remains inflationary recession. The Fed continues to signal a War on Inflation. Bit by bit they raise rates and hope for the Soft Landing that dances like sugar plums in their wildest dreams. They seem serious in their quest to kill inflation, but there are many who doubt the Fed’s continued resolve. If they falter, will it all just continue continuing? Will it get worse? Much depends on what these few men and women decide. And no one is sure what that will be. I don’t think that they know what they will do. To make matters more interesting, the Federal Government’s solution to inflation, in the ever-important struggle to be seen as ‘doing something’, is to spend and tax (“Inflation Reduction Act”). Politicians seem like so many clowns piling into a car, so many errant Spanish knights tilting at windmills. But what do I know? I am just a humble peasant with a pen.
What this may (or may not) mean for Land Markets in Texas?
If the Fed is going to war with inflation then raising rates is what they will do. That is one of their biggest tools. They could also stop buying housing bonds (and other bonds) by the billions (known as a part of the notorious Quantitative Easing, or QE, program) but they have not. I assume it is because they do not want the housing market to completely seize; and I suspect it would if the Fed stepped out as the biggest MBS customer out there. So interest rates it is. Their goal is to punch asset prices in the face until they go down and stay down. They need a clean KO to keep the title. The punches appear to be working on the housing side. Single family prices are woozy and stumbling across the nation. Also in Texas and especially in the big cities of the Golden Triangle (DFW - San Antonio - Houston). And while housing does not equal land and vice versa, the two are cousins. Land markets will see Cousin Eddy on the ropes, bloody and wobbly, and sympathize with his pain.
The good news is that land markets are still heavily cash-based, and they do not need a low-interest FHA loan with only 5% down to work. More good news is that July inflation still headlined at 8.5% (more if you doubt the official number like I do). And so more good news for land is that the risk-free rate is negative. So where to go? Residential real estate? Commercial? The stock market (whew boy, you are a gambler)? So cash heavy investors, or those trading via 1031 Exchange, need some place safe to store their value. And, with its favorable tax treatment and limited supply, land is still a great place to do that.
Metrics.
Market data as of noon-ish, August 12, 2022. Compliments of MarketWatch App for iOS and my iPhone.
Very Important Note: Observe how the yield for the 2Y UST Note (3.25%) is greater than the 10Y Note (2.85%). This is called an Inverted Yield Curve. This is generally considered a very bad omen. Much like a raven cawing at the stroke of midnight while a black cat crosses your path causing you to simultaneously break a mirror while opening an umbrella indoors. If you peer hard at the following graph, you might see the red arrows pointing to previous yield curve inversions. Those happen just before shaded, gray areas which denote recessions.
Reading recommendations.
I read. Quite a bit. Blogs. Substacks. Books. I just really like to read. The best thing I can do for other writers out there is to recommend them. But I will only recommend those that I think are important. And good.
Doomberg. Doomberg comments on markets and the economy. The Green Cartoon Chicken has a special flare and a knack for energy markets (oil, gas, etc). It is Doomberg that got me thinking about the economy in terms of energy. Framing the economy in that perspective blew my mind in a very, very good way. His/They/Its philosophy is ‘energy is life.’ When you get down to brass tacks and really chew on the Philosophy of Reality then this idea could not be more true. Do yourself a favor and read a couple of the free essays.
Not long after coming across Doomberg and devouring everything the green chicken wrote, a Very Trusted Person in my life separately recommended How the World Really Works by Vaclav Smil. I found the book to be extremely important for anyone serious about understanding the economy and Economics.
Important RE Headlines:
Housing Inventory Growth Has Slowed in Recent Weeks
June Job Openings and Monetary Policy Considerations
Refinancing Activity Down 82% Compared to August 2021
Where I get my information:
An analyst’s analysis is only as good as the information they possess. As the old programming saying goes: garbage in-garbage out. The following is a list of my sources…
The Amazing Realtors with the Grand Land Company
LandWatch.com and LandsofTexas.com
MarketWatch App (market quotes and data)
NAHB’s Eye on Housing blog
FRED: Federal Reserve Economic Data, Federal Reserve Bank of St. Louis
Texas A&M Real Estate Center
Texas Association of Realtors
Austin Board of Realtors
North Texas Information System
Houston Association of Realtors
San Antonio Board of Realtors
I’ve been reading a fantastic book on the French Revolution: Citizens by Simon Schama
Boy, that's a liad of info, but good stuff. Let's talk about the French revolution next time we have a chance to chat. I did a little research when we lived there. Good stuff from a French perspective. Thanks