REGION ONE – PANHANDLE AND SOUTH PLAINS

GENERAL MARKET CONDITIONS FOR 2008

Prepared By

Mickey Nixon, ARA – Region One Team Captain

Region One, the most northerly region in Texas, is bordered on the west by New Mexico and by

Oklahoma on the north and east. The upper third of the region is commonly known as the

Panhandle, while the South Plains comprises the balance.

• There has been very limited demand for large hunting and recreational properties. One real

estate professional reported reductions in asking prices of 8% to 34% for large “trophy”

ranches. There has been moderate demand for small and mid-sized ranches; this sector has

had stable prices.

• Farm commodity prices fell sharply. Cotton acreage and production were down in 2008 due

to a shift from cotton to corn and grain sorghum. Fuel prices are much lower; however, high

fertilizer and seed costs affect profitability.

• The inventory of good irrigated land, that is for sale, is still in a decline and land prices have

increased. Landlords are hesitant to sell because of the good returns from sharecrop lease

or cash rent arrangements. Irrigated land is still in demand. Values for farms with weak,

or marginal, irrigation water rose because of the dwindling inventory of prime irrigated land.

• Dairy operators continued to purchase land for expansion. It is noted, however, that this

trend is slowing down in early in 2009 as low milk prices have hammered dairy industry

profitability. Relocations and dairy construction activities have been put on hold.

• Even with higher production costs, demand for dryland farms increased due to favorable

production and pricing. Dry cropland is nearly always leased on a crop share basis.

• Large land owners and operators are concerned about income caps on farm program

payment eligibility.

North Panhandle

Carson, Dallam, Gray, Hansford, Hartley, Hemphill, Hutchinson, Lipscomb, Moore,

Ochiltree, Oldham, Potter, Roberts and Sherman Counties

Sales activity was fairly strong in early 2008, but slowed a bit at the end of the year. Prices were

stable. Increased crop production costs remained a factor. Most acreage was planted to corn and

milo; wheat yields were fair to poor and corn yields were average.

Cash leases for irrigated cropland are common in the northwest quadrant of the Panhandle; lease

rates increased during 2008. A crop share lease is most prevalent in the eastern sector of the

Panhandle.

Cash lease rates for grazing and hunting on native rangeland continued to be stable. Range

conditions were fair. Values and lease rates are generally higher in the eastern Panhandle as rainfall

and carrying capacity increase.

South Plains from Amarillo to Lubbock

Armstrong, Bailey, Briscoe, Castro, Cochran, Crosby, Deaf Smith, Floyd, Hale, Hockley,

Lamb, Lubbock, Parmer, Randall and Swisher Counties

Crop yields on dryland were below average due to extreme heat in the early growing season. It is

noted that there was a scattering of hail loss. Irrigated cotton brought in average yields. The land

market was active in early 2008 and slowed with the general economy in the later part of the year.

Dairy-related buyers were still active in Bailey, Castro, Deaf Smith and Parmer counties. This trend

has slowed down as milk prices have soured. The demand for farms with weaker irrigation water

increased. Demand and prices of dryland were stable.

Native rangeland is in scattered areas along draws or a band of sandhills and runs southeast across

the region. Generally, these are smaller tracts utilized in conjunction with adjoining cropland.

Range conditions were average.

Crop share leases are the most common lease arrangement for both irrigated and dry cropland; rental

rates and terms remained fairly stable. The trend of absentee landlords selling to tenants continued,

but to a lesser degree due to the higher commodity prices and the turmoil in the financial industry.

Drip irrigation continued to be installed, but on a limited basis due to the high cost of installation.

Prices for land enrolled in the Conservation Reserve Program (CRP) increased; some CRP contracts

were extended to 2023. Sales activity remained limited, but demand from investors remained

strong.

South Plains to the South of Lubbock

Andrews, Borden, Dawson, Ector, Gaines, Garza, Howard, Lynn, Martin,

Midland, Terry and Yoakum Counties

This area is has a diverse land use mixture. The topography has rolling plains, broad valleys and

flood plains. Most of the land in Garza, Borden, Andrews, Midland, Ector and Howard counties is

native range that is utilized for cattle grazing. Much of the native range was leased for hunting.

Most cultivated farming utilizes dryland cultural practices due to inadequate groundwater. Irrigation

practices are predominantly sprinkler due to sandy soils.

Strong demand and a limited inventory of dryland farms followed a bumper cotton crop in 2007 and

it is noted that crop yields in 2008 were average to below. Farming is localized geographically and

is limited by soil types that are conducive to cultivation. Where there is adequate groundwater,

crops include cotton, small grains and peanuts. The limited number of farmland buyers is typically

composed of local farmers. Values for the better-irrigated farm properties increased as did the

market for the marginal water farms. Some CRP farms were placed back in production, if there was

underground water available. Several of these farms are producing organic crops, mainly peanuts.

Region One Contributors

Keith Barlow, ARA ............................................................. 432.689.9878; fax 888.677.4541

Barlow Appraisal Associates

kbarlow@cox.net

Post Office Box 2135

Midland, Texas 79702-2135

Bryan Bednarz, ARA .......................................................... 806.281.1789; fax 806.799.6999

Capital Farm Credit

bryan.bednarz@capitalfarmcredit.com

P O. Box 6520

Lubbock, Texas 79493

Chad Dugger ........................................................................ 806.763.5331; fax 806.763.1340

Chas. S. Middleton and Son

chad@csmandson.com

1507 13th Street

Lubbock, Texas 79408-2524

BL Jones, III, ARA ............................................................. 806.745.4631; fax 806.687.4074

AgTexas Farm Credit Services

BL.Jones@AgTexas.com

Post Office Box 53240

Lubbock, Texas 79453

L. Sam Middleton, ARA ..................................................... 806.763.5331; fax 806.763.1340

Chas. S. Middleton and Son

sam_middleton@chassmiddleton.com

1507 13th Street

Lubbock, Texas 79401

Mickey Nixon, ARA ............................................................ 806.281.1789; fax 806.799.6999

Capital Farm Credit

mickey.nixon@capitalfarmcredit.com

Post Office Box 6520

Lubbock, Texas 79493

James B. “Nardie” Vine, Jr., ARA .................................... 210.696.8909; fax 210.568.6215

Vine and Associates

jbvine@satx.rr.com

106 Vance Jackson #2

San Antonio, Texas 78230

Region 1 - Panhandle and South Plains

Land Use or Class

Value Ranges

Activity/Trend

Rental Range

Activity/Trend

North Panhandle

Dallam, Sherman, Hansford, Ochiltree, Lipscomb, Hartley, Moore, Hutchinson, Roberts, Hemphill, Oldham,

Potter, Carson and Gray Counties

Irrigated Cropland Good Water

$2,000 to $2,500

Active/Increase

$125 to $175

Stable/Stable

Irrigated Cropland Fair Water

$1,500 to $1,900

Active/Stable

$80 to $135

Stable/Stable

Dry Cropland East

$400

to

$600

Limited/Stable

$25 to $45

Stable/Stable

Dry Cropland West

$325

to

$450

Limited/Stable

$25 to $45

Stable/Stable

Rangeland

$400

to $1,250

Moderate/Stable

$7

to $10

Stable/Stable

Conservation Reserve Program

$400

to

$750

Moderate/Increase

$30 to $44

Stable/Stable

Value for irrigated cropland typically includes center pivot sprinklers

Minerals are typically either not included or not a factor in the land classes listed above

South Plains - Amarillo to Lubbock

Deaf Smith, Randall, Armstrong, Parmer, Castro, Swisher, Briscoe, Bailey, Lamb, Hale, Floyd, Cochran,

Hockley, Lubbock and Crosby Counties

Irrigated Cropland Good Water

$1,500 to $2,500

Active/Increase

$125 to $175

Stable/Stable

Irrigated Cropland Fair Water

$800

to $1,400

Active/Increase

$80 to $140

Stable/Stable

Drip Irrigation

$1,500 to $2,300

Moderate/Stable

$125 to $200

Stable/Stable

Dry Cropland Wheat

$300

to

$400

Limited/Stable

$25 to $45

Stable/Stable

Dry Cropland Cotton

$400

to

$500

Limited/Stable

$25 to $45

Stable/Stable

Rangeland

$350

to

$800

Moderate/Stable

$7

to $10

Stable/Stable

Conservation Reserve Program

$350

to

$600

Moderate/Increase

$30 to $45

Stable/Stable

Value for irrigated cropland typically includes center pivot sprinklers

Minerals are typically either not included or not a factor in the land classes listed above

South Plains - South of Lubbock

Irrigated Cropland Better Water

(Peanuts)

$1,500 to $2,600

Active/Stable

$135 to $185

Stable/Stable

Irrigated Cropland Fair Water

$800

to $1,200

Active/Stable

$75 to $125

Stable/Stable

Dry Cropland Cotton

$450

to

$750

Active/Increase

$25 to $45

Stable/Stable

Rangeland

$225

to

$900

Active/Increase

$3

to

$7

Stable/Stable

Conservation Reserve Program

$400

to

$500

Moderate/Increase

$30 to $40

Stable/Stable

Value for irrigated cropland typically includes center pivot sprinklers

Minerals are typically either not included or not a factor in the land classes listed above

Yoakum, Terry, Lynn, Garza, Gaines, Dawson, Borden, Andrews, Martin, Howard, Ector and Midland

Counties

Far West Texas

Big Bend

HUDSPETH

CULBERSON

EL PASO

BREWSTER

PRESIDIO

JEFF DAVIS

PECOS

REEVES

TERRELL

WARD

WINKLER

LOVING

Trans - Pecos

N

E

W

S

Region

#2

REGION TWO – FAR WEST TEXAS, TRANS-PECOS AND BIG BEND

GENERAL MARKET CONDITIONS FOR 2008

Prepared By

Karl Armstead, ARA – Region Two Team Captain

Region Two encompasses West Texas and is bound on the north by the State of New Mexico and

on the south by the Republic of Mexico. Guadalupe Peak, at 8,749 feet, is the highest point in Texas

and is in Culberson County. In terms of land mass, the region includes the four largest Texas

counties – Brewster, Hudsepth, Presidio and Culberson. Loving County, the least populated county

in Texas, is also in Region Two.

Highlights of the overall West Texas market precede brief discussions related to each sub-region.

• The region is composed of a diverse land use mix. The topography features mountainous

expanses with broad valleys and flood plains.

• Generally, land is native range and is utilized for cattle grazing. It is noted that grazing

sheep and goats is inhibited by populations of coyotes, mountain lions and eagles.

• Native rangeland has typically been held by established ranching families. However, over

the last twenty or so years, low income levels from cattle operations plus pressure from

individuals (and entities) with increasing disposable income from non-agricultural sources,

have caused property ownerships in several cattle ranches to change. Another development

has been the creation of “ranchettes”. It is expected that there will continue to be market

pressure being exerted.

• Irrigation is predominantly by flooding due to the high clay content of the soils and the

abundant water volumes. Center pivot sprinkler systems have become more common as a

result of increasing water pumping costs.

• Supply and demand are generally stable and are dominated by both investors and

recreationalists, with the cultivated land market generally dominated by producers.

• It is noted that drought, which is common, is a limiting factor throughout the region.

Far West Texas

Culberson, El Paso and Hudsepth Counties

The area covers approximately 8,765 square miles. A significant area, located in the valley bottoms

and flood plains, is cultivated under irrigation practices. Many areas posses abundant supplies of

groundwater, the quality of which varies greatly. The valley, that is associated with the Rio Grande,

has irrigation districts and furnish water based on adjudicated water rights.

In the El Paso Upper Valley, the market is generally driven by the investor, with strong urban

pressures being present. In the El Paso Lower Valley, there is moderate urban pressure and the

investor is again the primary market force. In the areas around Van Horn and Dell City, the market

continued to increase and was typically producer-oriented. Water volumes in these areas continued

to be an attractive factor, that was stimulated by water rights speculation for municipal uses.

Big Bend

Brewster, Jeff Davis and Presidio Counties

The area covers some 12,284 square miles and topographically is characterized as mountainous with

broad upland areas and canyon bottoms. The geology of the Big Bend is unique; annually, the area

regularly attracts more than 350,000 visitors. Some lands, in the valley along the Rio Grande, are

cultivated and are irrigated utilizing adjudicated water rights from the river. Typical cash crops

include alfalfa, onions, carrots and melons. The farmland market continued to be limited, with the

major adverse factors being increasing operating costs, decreasing commodity prices and travel

distances to market centers.

In the area associated with the Davis Mountains, demand for properties remained strong, it is noted

that only a few properties were available. The market is dominated by the investment-driven

recreational rancher and/or environmentalist. In the Highland area, the market is driven primarily

by investment operators. Around the Desert Mountains, the market driven both by purchase for

investment purposes as well as for use as recreational ranches.

Trans-Pecos

Loving, Pecos, Reeves, Terrell, Ward and Winkler Counties

The area covers approximately 15,191 square miles and is characterized as having rolling plains,

broad valleys and flood plains. Prior to the 1970's, significant amounts of land in the Pecos River

Valley were cultivated and irrigated. The area possesses abundant supplies of poor quality,

groundwater along with alkaline soils. Agricultural orientation is a factor considered by most

landowners as, generally speaking, the area lacks scenic splendor, geologic uniqueness and varied

recreational opportunities.

Region Two Contributor

Karl F. Armstead, ARA . . . . . . . . . . . . . . . . . . . . . . . . . . . 432.336.8455; fax 432.336.8462

Omega Appraisals, LLC

armstead@netwest.com

Post Office Box 358

Fort Stockton, Texas 79735

Region 2 - Far West Texas, Trans-Pecos and Big Bend

Land Use or Class

Value Ranges

Activity/Trend

Rental Range

Activity/Trend

Far West Texas

Culberson, El Paso and Hudspeth Counties

Rangeland

$220

to

$320

Increase/Increase

$0.65 to $0.85

Stable/Stable

Dell City Irrigated Cropland

$600

to

$800

Stable/Increase

$85

to $120

Stable/Stable

El Paso Upper Valley Irrigated

$9,000 to $12,000

Stable/Stable

$100 to $125

Stable/Increase

El Paso Lower Valley Irrigated

$3,000 to $5,200

Stable/Stable

$65

to

$85

Stable/Stable

Van Horn Irrigated Cropland

$300

to

$500

Stable/Stable

$25

to

$50

Stable/Stable

Big Bend

Jeff Davis, Presidio and Brewster Counties

Davis Mountains Rangeland

$400

to

$480

Increase/Increase

$3.25 to $5.00

Stable/Stable

Highlands Rangeland

$450

to

$880

Increase/Increase

$2.50 to $2.75

Stable/Stable

Desert Mountains Rangeland

$300

to

$600

Increase/Increase

$1.25 to $1.50

Stable/Stable

Trans-Pecos

Reeves, Loving, Winkler, Ward, Pecos and Terrell

Rangeland*

$225

to $2,045

Increase/Increase

$0.50 to $1.00

Decrease/Decrease

Irrigated Cropland

$1,080 to $1,375

Increase/Increase

$10.00 to $25.00

Decrease/Decrease

* High value includs all minerals

Central Texas

South Central Texas

WHEELER

DONLEY

COLLINGSWORTH

HALL CHILDRESS

HARDEMAN

WILBARGER

MOTLEY

COTTLE

FOARD

WICHITA

CLAY

DICKENS

KING

KNOX

ARCHER

BAYLOR

JACK

THROCKMORTON

YOUNG

GLASSCOCK

STERLING

CRANE

UPTON

REAGAN

IRION

CROCKETT

SCHLEICHER

SUTTON

VAL VERDE

EDWARDS

KINNEY

KENT

HASKELL

STONEWALL

SCURRY

FISHER

JONES

SHACKELFORD

STEPHENS

MITCHELL

NOLAN

TAYLOR

COKE

RUNNELS

TOM GREEN

CONCHO

North Texas

N

E

W

S

Region

#3

REGION THREE - NORTH, CENTRAL AND SOUTH CENTRAL TEXAS

GENERAL MARKET CONDITIONS DURING 2008

Prepared By

Victor Probandt, ARA – Region Three Team Captain

Region Three encompasses a large area and stretches from the Texas-Oklahoma border, on the

north, to the Rio Grande and Republic of Mexico, on the south. With the exception of Region Five,

all of the other reporting regions abut at least a portion of Region Three. General highlights of the

overall regional market precede brief discussions related to the area’s three sub-regions.

• With regard to rangeland properties, some areas of the regional market were active during

the first half of 2008, but there was little activity in the second half.

• With pastureland, several areas showed increases; however, the increase was primarily on

the upper ends in the North and South Central Texas areas.

• “Surface only” sales continued to occur and minerals continued to exhibit high values. As

such, sellers retain the minerals that they own.

• The reservation of wind rights has also continued. This was primarily in the Central Texas

area, bit was also noted to a degree in North Texas.

• Another market-area trend is an increased number of leases being based on a per head per

month ratio rather than a price per acre basis. This arrangement has been done primarily by

recreational property owners, who only want livestock during certain periods of the year and

not during hunting season. This trend appears to be a more favorable method of leasing for

both the lessor and the lessee as it allows greater flexibility for both parties.

North Texas

Archer, Baylor, Childress, Clay, Collingsworth, Cottle, Dickens, Donley,

Foard, Hall, Hardeman, Jack, King, Knox, Motley, Throckmorton,

Wheeler, Wichita, Wilbarger and Young Counties

Prices paid for ranch properties saw some increase in both Jack and Young counties, as these

counties are in closer proximity to the Dallas/Ft. Worth metroplex. Overall, the other counties in

North Texas were stable. Dryland and cropland increased slightly in early 2008. Again, this

increase was in the first half of 2008 and was the result of high commodity prices.

Central Texas

Coke, Concho, Fisher, Haskell, Jones, Kent, Mitchell, Nolan, Runnels, Scurry,

Shackelford, Stephens, Stonewall, Taylor and Tom Green Counties

The market for pastureland increased and was active in the first half of 2008, but fell in the second

half. The lower end of the land values remained the same, while the upper range increased slightly.

This increase was primarily in Shackelford and Stephens counties. It is noted that demand dropped

significantly in the second half of 2008. Farmland prices were stable for 2008; the number of sales

of cropland went down in both the third and fourth quarters of 2008.

South Central Texas

Crane, Crockett, Edwards, Glasscock, Irion, Kinney, Reagan, Schleicher,

Sterling, Sutton, Upton and Val Verde Counties

In this area, rangeland prices increased slightly, while farmland remained stable. As with the other

areas, the increase in rangeland prices occurred in first half of 2008, with activity dropping

significantly in the second half. Most of these properties sell surface only.

Region Three Contributors

Bill S. Beam, ARA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325.437.7600; fax 325.437.7601

Western Appraisals

bill@westernpprl.com

1250-A Petroleum Drive, #100 – Abilene, Texas 79608

Reagan Bownds, ARA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325.265.4465; fax 325.265.4465

Capital Farm Credit

regan.bownds@capitalfarmcredit.com

Post Office Box 800 – Mason, Texas 76856

James M. Cowsert, ARA . . . . . . . . . . . . . . . . . . . . . . . . . . 940.422.4931; fax 940.422.4460

Post Office Box 9 – Munday, Texas 76371

cowsertj@valornet.com

Chad Dugger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 806-763.5331; fax 806.763.1340

Chas S. Middleton & Son

chad@csmandson.com

1507 13th Street – Lubbock, Texas 79401

Sam Middleton, ARA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 806-763.5331; fax 806.763.1340

Chas S. Middleton & Son

sam_middleton@chassmiddleton.com

1507 13th Street – Lubbock, Texas 79401

A.E. “Butch” Nelson, Jr., ARA . . . . . . . . . . . . . . . . . . . . . 325.698.3374; fax 325.698.3381

Nelson Farm & Ranch Properties

aenelson2@earthlink.net

Post Office Box 5051 – Abilene, Texas 79608

Victor R. Probandt, ARA . . . . . . . . . . . . . . . . . . . . . . . . . 325.658.2773; fax 325.659.4192

Stribling-Probandt Appraisals

victorp@zipnet.us

502 South Koenigheim, Suite 3-B – San Angelo, Texas 76903

Tom J. Sammons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325.597.1391; fax 325.597.1391

The Sam McAnally Company

sammons@centraltx.us

Post Office Box 1066 – Brady, Texas 76825

Region 3 - North, Central and South Central Texas

Land Use or Class

Value Ranges

Activity/Trend

Rental Range

Activity/Trend

North Texas

Wheeler, Donley, Collingsworth, Hall, Childress, Motley, Cottle, Hardeman, Foard, Wilbarger, Wichita,

Clay, Dickens, King, Knox, Baylor, Archer, Throckmorton, Young and Jack Counties

Irrigated Cropland

$700 to $1,200

Stable/Increase

$40

$50

Stable/Stable

Class II & III Dry Crop

$500 to $1,000

Stable/Increase

$35

$50

Stable/Stable

Class IV & V Dry Crop

$400 to $600

Stable

$15

$30

Stable/Stable

Rangeland >2,000 Acres

$550 to $1,500

Stable/Increase

$8

$12

Stable/Stable

Rangeland <2,000 Acres

$650 to $1,750

Stable/Increase

$8

$12

Stable/Stable

Hunting Lease Rangeland

$3

$12

Stable/Stable

Rangeland lease rates per animal unit year long range from $150 to $200

Central Texas

Kent, Stonewall, Haskell, Scurry, Fisher, Jones, Schackelford, Stephens, Mitchell, Nolan, Taylor, Coke,

Runnels, Tom Green and Concho Counties

Irrigated Cropland

$1,500 to $2,300

Stable/Stable

$50

$100

Stable/Stable

Class II & III Dry Crop

$600 to $1,500

Stable/Stable

$35

$50

Stable/Stable

Class IV & V Dry Crop

$450 to $700

Stable/Stable

$25

$40

Stable/Stable

Rangeland >2,000 Acres

$650 to $2,000

Stable/Increase

$5

$13

Stable/Stable

Rangeland <2,000 Acres

$750 to $2,200

Stable/Increase

$5

$13

Stable/Stable

Hunting Lease Rangeland

$5

$15

Stable/Stable

Rangeland lease rates per animal unit year long range from $150 to $200

South Central Texas

Glasscock, Sterling, Crane, Upton, Reagan, Irion, Crockett, Schleicher, Sutton, Val Verde,

Edwards and Kinney Counties

Irrigated Cropland

$600 to $800

Stable/Stable

$50

$75

Stable/Stable

Dry Cropland

$350 to $600

Stable/Stable

$25

$55

Stable/Stable

Rangeland > 2,000 Acres

$250 to $1,400

Stable/Increase

$4

$10

Stable/Stable

Rangeland < 2,000 Acres

$350 to $2,000

Stable/Increase

$4

$10

Stable/Stable

Hunting Lease (Rangeland)

$2

$15

Stable/Stable

Rangeland lease rates per animal unit year long range from $150 to $200

North Texas

Northeast Texas

Piney Woods North

Piney Woods South

MONTAGUE

GRAYSON

COOKE

FANNIN

HUNT

WISE

DENTON

COLLIN

RAINS

ROCKWALL

DALLAS

PALO PINTO

PARKER

TARRANT

VAN ZANDT

KAUFMAN

ELLIS

JOHNSON

HOOD

SOMERVELL

RED RIVER

LAMAR

BOWIE

DELTA

TITUS

FRANKLIN

MORRIS

HOPKINS

CASS

CAMP

WOOD

UPSHUR

MARION

HARRISON

GREGG

SMITH

PANOLA

RUSK

HENDERSON

CHEROKEE

ANDERSON

SHELBY

NACOGDOCHES

HOUSTON

SAN AUGUSTINE

SABINE

ANGELINA

TRINITY

NEWTON

JASPER

POLK

TYLER

N

E

W

S

Region

#4

REGION FOUR – NORTH TEXAS, NORTHEAST TEXAS AND PINEY WOODS

GENERAL MARKET CONDITIONS FOR 2008

Prepared By

Charles S. “Scott” Seely, ARA – Region Four Team Captain

On the north and east sides, Region Four is bordered by the states of Oklahoma, Arkansas and

Louisiana. The Dallas-Fort Worth metroplex is located in the west quadrant of the region; the

Houston metropolitan area is located some eighty miles south of the region’s southern boundary.

Due to the diverse nature of the area, Region Four has been divided into four sub-regions.

Highlights of the overall regional market precede a brief discussion of each sub-region.

• In most counties, prices have stabilized. Real estate brokers are reporting that properties are

experiencing extended days on the market. Many report that a seller’s expectation of price

exceeds the buyer’s willingness to pay. Demand is slower, but properly priced, high quality

tracts continue to sell.

• Rental demand for pasture and recreational leases exceeds the supply.

• In many counties, the continuing subdivision of wooded and pasture tracts, into rural

residential or recreational tracts, has almost eliminated sales larger than 300 acres.

• Wooded tracts, with good recreational qualities, will consistently command prices on par

with good pasture.

• In the North and Northeast Texas areas, most buyers are from the Dallas-Fort Worth

metroplex.

• In the Piney Woods, the influence of the International Paper, Louisiana Pacific and Temple-

Inland sell-off has moved to long term or final users. Some of the “final users” have now

re-sold their tracts at higher prices. In some areas, there have been slight increases, but the

majority of the counties show stable prices.

North Texas

Cooke, Ellis, Fannin, Grayson, Hunt, Johnson, Kaufman,

Montague, Parker, Rains, Somervell and Van Zandt Counties

In that there is almost a total lack of rural lands in Dallas, Tarrant, Collin and Denton counties, these

counties have not been considered in the development of the 2008 regional value trends. The

transitional counties of Hood, Johnson, Parker, Rockwall and Wise are in a separate category. These

fringe counties are becoming an extension of the Dallas-Fort Worth metroplex.

In the North Texas region, sales activity declined and the few sales show stability. The Barnett shale

natural gas formation continues to influence the land market, to the northwest and southwest of Fort

Worth, but to a lesser degree due to less drilling activity.

Northeast Texas

Bowie, Camp, Cass, Delta, Franklin, Hopkins, Lamar, Marion,

Morris, Red River, Titus, Upshur and Wood Counties

The Dallas metroplex remains the primary source of buyers for most properties, but the speculative

segment of the demand is gone. The influx of buyers from Florida has stopped. Buyers, who were

from New Mexico and the Texas Panhandle and were interested in the larger farms and ranches,

slowed drastically following the decline in cattle and commodity prices. However, the few sales of

larger tracts still showed extremely strong prices and most were sold by brokers working outside the

area multiple listing services.

Interest in cropland is generally from adjacent farmers. Pasture tracts will still command a higher

price, but the number of buyers has decreased dramatically. The timber component of the land

market has taken a huge decline with the loss of demand for lumber from the general recession.

With very few exceptions, the number of sales has fallen back to the 2004 level. On the other hand,

the asking prices are still generally over-priced. Thus far, there is no weakness in actual values, i.e.,

the general market has been fairly stable since mid 2007. It will be interesting to see if some of the

larger farms and ranches, that sold for very strong prices and are mainly production oriented, can

make their debt service at the current cattle and crop prices.

Piney Woods North

Anderson, Cherokee, Gregg, Harrison, Henderson, Houston, Nacogdoches,

Panola, Rusk, Shelby and Smith Counties

The Piney Woods North land market slowed during mid to late 2008, with prices becoming stable.

It is noted that brokers report a lack of listings of good properties and that sellers have high price

expectations.

There is not enough cropland in this region to have a separate classification.

Demand for pasture tracts is primarily from Dallas-area investors, coupled with some local market

participants. The areas closer to the Dallas-Fort Worth metroplex experience the higher prices and

also higher demand.

Hunting and recreation dominate this rural land market. Purchasers seek tracts of timberland with

good interior roads, good surface water and woodland conducive to hunting. This strong demand,

coupled with the decreasing number of acres available for lease, has caused hunting lease rates to

generally increase.

Piney Woods South

Angelina, Jasper, Newton, Polk, Sabine, San Augustine, Trinity and Tyler Counties

The Piney Woods South market generally slowed; however, but some areas did see slight increases

in price. Most properties showed increased sale times and stable prices. Sellers continue to ask

higher prices. Brokers report a lack of quality, reasonably priced listings.

The land placed on the market by International Paper and Louisiana-Pacific has been absorbed. As

in other areas, the original investors, who purchased from the companies, have sold to long term

holders.

The demand for properties in the Piney Woods South is primarily from Houston-area buyers.

Region Four Contributors

Mark A. Lewis, ARA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 936.632.4230; fax 936.637.3964

Dickerson-Seely & Associates, Inc.

mark@dickerson-seely.com

308 East Lufkin Avenue

Lufkin, Texas 75901

William P. “Pat” Murphy, ARA . . . . . . . . . . . . . . . . . . . . 903.785.0441; fax 903.784.0076

Pat Murphy and Associates

wp_murphy@sbcglobal.net

712 19th Street

Paris, Texas 75460

James K. Norwood, ARA . . . . . . . . . . . . . . . . . . . . . . . . . 817.284.2222; fax 817.595.2222

James K. Norwood, Inc.

norwood2@charter.net

4025 Diamond Loch West

Fort Worth, Texas 76180

Scott Seely, ARA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 936.632.4230; fax 936.637.3964

Dickerson-Seely & Associates, Inc.

scott@dickerson-seely.com

308 East Lufkin Avenue

Lufkin, Texas 75901

Region 4 - North and Northeast Texas and

Piney Woods North and South

.

Land Use or Class

Value Ranges

Activity/Trend

Rental Range

Activity/Trend

Dry Cropland >200 Acres

$1,500 to $4,500

Slower/Stable

$30 to $50

Stable/Stable

Improved Pasture >200 Acres

$1,500 to $4,500

Slower/Stable

$15 to $30

Stable/Stable

Native Pasture >200 Acres

$1,500 to $4,500

Slower/Stable

$15 to $25

Stable/Stable

Hardwood Timber >200 Acres

$1,200 to $2,500

Slower/Stable

$6

to $12

Stable/Stable

These hardwood tracts reflect only fair timber quality and income is from hunting leases

Dallas, Tarrant, Collin and Denton Counties - Not included in development of value trends due to there being almost a total lack of rural lands within the counties

Northeast Texas

Lamar, Red River, Bowie, Delta, Hopkins, Franklin, Titus, Camp, Morris, Cass, Wood,

Upshur and Marion Counties

Class II Dry Crop >400 Acres

$1,200 to $1,600

Slower/Stable

$45 to $75

Stable/Stable

Class III Dry Crop >300 Acres

$900

to $1,100

Slower/Stable

$25 to $40

Stable/Stable

Improved Pasture >300 Acres

$1,400 to $2,000

Slower/Stable

$15 to $25

Stable/Stable

Native Pasture >300 Acres

$1,000 to $1,500

Slower/Stable

$10 to $15

Stable/Stable

Hardwood Timber >300 Acres

$1,000 to $1,500

Slower/Stable

$2

to

$8

Stable/Stable

These hardwood tracts reflect only fair timber quality and income is from hunting leases

Henderson, Smith, Gregg, Harrison, Henderson, Cherokee, Rusk, Panola, Houston

Nacogdoches, and Shelby Counties

Improved Pasture >300 Acres

$1,500 to $4,000

Slower/Stable

$15 to $30

Stable/Stable

Native Pasture >300 Acres

$1,500 to $3,500

Slower/Stable

$10 to $20

Stable/Stable

Upland Pine Timber >300 Acres $1,100 to $2,200

Slower/Stable

$5

to $15

Stable/Stable

Bottomland Hardwood Timber

>300 Acres

$800

to $1,200

Slower/Stable

$8

to $12

Stable/Stable

These hardwood tracts reflect only fair timber quality and income is from hunting leases

Trinity, Angelina, San Augustine, Sabine, Polk, Tyler, Jasper and Newton Counties

Improved Pasture >300 Acres

$1,300 to $2,500

Slower/Stable

$15 to $30

Stable/Stable

Native Pasture >300 Acres

$1,300 to $2,000

Slower/Stable

$10 to $20

Stable/Stable

Upland Pine Timber > 300

Acres

$1,100 to $2,000

Slower/Increase

$5

to $15

Stable/Stable

Bottomland Hardwood Timber

>300 Acres

$800

to $1,100

Slower/Stable

$8

to $15

Stable/Stable

These hardwood tracts reflect only fair timber quality and income is from hunting leases

100 to 400 acre tracts.

North Texas Transitional Land

Wise, Parker, Rockwall, Hood and Johnson Counties

These counties are located in the transitional areas around Ft. Worth and Dallas. The properties sell

substantially in the past few years and are currently in the $15,000 to $25,000 per acre range for

for development purposes and also for homesite and recreational uses. Prices are have increased

These pine timberland tracts reflect cut-over base land prices - merchantable timber is not considered

North Texas

Piney Woods North

Piney Woods South

These pine timberland tracts reflect cut-over base land prices - merchantable timber is not considered

Montague, Cooke, Grayson, Fannin, Hunt, Palo Pinto, Somervell, Ellis, Kaufman, Van Zandt and Rains

Counties

GALVESTON

BRAZORIA

Coastal

Prairie

North

WASHINGTON

AUSTIN

COLORADO

GONZALES

FAYETTE

DE WITT

LAVACA

CALHOUN

JACKSON

MATAGORDA

VICTORIA

WHARTON

WALLER

MONTGOMERY

FORT BEND

HARRIS

MADISON

BURLESON

ROBERTSON

BRAZOS

GRIMES

LEON

SAN JACINTO

WALKER

ORANGE

CHAMBERS

JEFFERSON

HARDIN

LIBERTY

Central Coastal Prairie

Houston Area

Brazos Bottom

East Coastal Prairie and

Southeast Piney Woods

Southwest Piney Woods

Belville and

Brenham Area

N

E

W

S

Region

#5

REGION FIVE – SOUTHERN PINEY WOODS,

COASTAL PRAIRIES AND BRAZOS BOTTOM

GENERAL MARKET CONDITIONS FOR 2008

Prepared By

Wayne T. Young, ARA – Region Five Team Captain

Region Five is one of two regions in the State of Texas that fronts the Gulf of Mexico. Houston, the

largest city in Texas, is located in Harris County and continues to dominate the region. It is noted

that as Houston expands, areas north and west of the city, primarily the Woodlands and Katy areas,

have become significant in their own right, with regard to impact on land value trends.

• The City of Houston, as well as the nearby densely populated areas, impacts all properties

within Region Five to a significant degree. The most probable use of land, in counties

adjacent to Harris County, has become end-user rural residential, large scale residential

development or as holdings for residential development. The land uses, or classes, have

overlapped into one class that is best described as “land in Houston’s growth path”.

Due to the extremes found in land prices in both Harris and Galveston counties, these two

counties have not been included in the regional value/trend grid. While Harris and

Galveston counties have not been included in the grid, it is worth noting that sales of large

tracts used for residential development, in these counties and adjacent counties, have slowed

significantly when compared to other types of properties and other areas.

• As the demand for recreational property in out-lying areas has increased, the differences

associated with land types and uses, i.e., quality of pasture, etc., are having less impact on

price. In most cases, native and improved pasture prices are tending to overlap significantly.

While the individual factors are difficult to isolate, in aggregate they do have an impact on

price. More and more recreational properties can best be divided into poor, average and

good. Factors that impact a property’s appeal change from area to area. The challenge, from

an appraisal standpoint, is to know what combination creates the greatest value in a given

area. In general, those tracts with varied topography, water features, trees and good access

establish the upper end, while those tracts that are flat, open and with poor access establish

the lower end. While not conclusive in the 2008 data, it appears that those tracts, at the

lower end of the quality spectrum, have slowed more than those tracts at the upper end of

the range.

• Due to limited availability, there still seems to be demand for large tracts of land. In

harmony with this statement, the bulk of the demand seems to be for “good” quality tracts.

• The demand for large tracts has lessened the impact size has on per unit values. Historically,

a tract sells for less per acre as the size increases. This consideration has decreased

substantially and, in some markets, size ranges are essentially non-existent. Not only is size

impacting price less than in the past, in some cases, it seems a premium is being paid for

larger tracts.

• The following trend has remained unchanged for the last several years. Individuals in and

around Houston have purchased farms and ranches in out-lying counties for investment,

recreation and use as weekend retreats. A major motivation for the purchase has been

hunting, i.e., whitetail deer, bobwhite quail and water fowl. It is noted, however, that

“quality of life” issues appear to have replaced hunting as the primary motivation for

purchasing properties in the more scenic counties in the region, i.e., Austin, Washington,

Fayette, Lavaca, Gonzales and northern Colorado.

• The liquidation of large East Texas timber holdings has generated an increase in activity in

the area. While it appears the liquidation has slowed, the new land “in play” will continue

to impact area price trends.

• Lease rates have remained essentially constant over the last several years and appear to be

disconnected from price. It is noted that some cropland leases did increase as a result of

higher commodity prices.

• As stated, most of Region Five is dominated by buyers from not only Houston, but the

Woodlands and Katy. Essentially, land that is purchased is a combination of rural

residential/recreational and/or investment property. In general, most area brokers indicate

that activity slowed in 2008 and some said activity slowed significantly. Prices were not

down, but a number of area real estate professionals claim “the phones aren’t ringing”.

Year-end 2008 asking prices did not reflect much, if any, price reduction. This in part

explains some of the slow down in activity. Until sellers realize the market has slowed and

allow asking prices and price expectations to reflect that, activity will most likely remain

sluggish.

Eastern Coastal Prairie and Southeast Piney Woods

Chambers, Hardin, Jefferson, Liberty and Orange Counties

In 2006, “Rural Residential/Agricultural” was added to the categories on the trend grid. This

classification accounts for most tracts typically considered as a “hobby” farm. This property has

been gaining in popularity as the timber tracts and large farms break up. Drainage is often a critical

factor in that much of the area is low lying.

Because regional cropland sales continued to be very limited, the category is not on the trend grid.

Most tracts, that were historically rice farms, are converted to pasture. There are a few transactions

each year, but not enough to establish a trend. When idle cropland sells, it is not utilized as cropland

after purchase. All prices categories remained essentially flat.

While prices in general have remained flat, tracts in the west part of this region near Houston and

parcels in the east part of the region near Beaumont continued to increase in price. In most cases,

one could argue the price change is more due to a change in land use toward denser residential than

prices within a land category increasing.

As reported in previous reports, over the last few years, many large timber holdings have been

liquidated in East Texas. The breaking up of these large tracts has had a lasting impact on land in

the area. As the tract sizes decrease with further sales, this part of Texas will continue to gain in

popularity. This is in part due to proximity of population centers. As Houstonians look west and

north for land, they are running into people from San Antonio, Austin and the Dallas metroplex.

Growth will continue in this direction as there is still a considerable supply of “new land”.

Southwest Piney Woods

San Jacinto and Walker Counties

The price difference between improved pasture and native range has shrunk, though very good

improved pasture still commands a premium. “Rural Residential/Agriculture” lands and both

improved and native pasture continue to increase in price, though there was a significant slow down

in late 2008. Very few large pasture tracts are found in these two counties. As such, it is difficult

to establish a pasture price trend and, for practical purposes, most pasture tracts “fit” in the Rural

Residential/Agriculture classification. Buyers from the Woodlands continue to have significant

influence in this market.

Young timber, i.e., under five years, has little, if any, contributory value. Some buyers show equal

motivation for future appreciation and/or hunting as compared to timber prospects. Most tracts

range from 150 to 600 acres. There is continued sentiment that timber is a “safe haven” for money.

The activity that Montgomery County has enjoyed, from Houston, pushes into Walker County. The

growth of the Woodlands allows more individuals to live further north and still commute to work.

Walker County continues to have a greater benefit from its proximity to Houston than that enjoyed

by San Jacinto County.

Brazos Bottom

Brazos, Burleson, Grimes, Leon, Madison and Robertson Counties

Both the dryland and irrigated cropland markets are situated predominantly along the Brazos River

or in the Brazos Bottom. Historically, there has been very little activity in the Bottom, with land

seldom changing hands. The cultivated market has been reasonably stable with prices, represented

by the few arm’s-length transactions, being fairly consistent. Rents, for the most part, are at the

same general levels. A few rental agreements, based on recent high commodity prices, were above

the norm. The improved pasture and native range markets slowed considerably in the south part of

the region. Leon and Madison counties remained active through 2008.

Unimproved wooded tracts, regardless of size, continued to sell, but at a slower pace than in

previous years. Brazos and Grimes counties again account for most of the higher priced land. As

noted in previous reports, Burleson County, the north end of Grimes County, Madison County and

the east sector of Robertson County are gaining in popularity as land for sale becomes harder to find.

Houston Area

Brazoria, Fort Bend, Galveston, Harris, Montgomery and Waller Counties

There is essentially no cropland in the immediate vicinity of the Houston metropolitan area. Rural

lands in this area tend to be grouped more by land that has been somewhat maintained and native

land. The more aesthetically appealing tracts that have been either maintained or somewhat “fixed

up” continue to command a premium. All other types tend to fall into a different land class that is

at a slightly lower price. Land prices are reported to be moving upward at a strong rate, for all types

of rural land.

As previously stated, both Harris and Galveston counties have been removed from the regional trend

grid as there is essentially no open land not impacted by development. Land in this area is

essentially one land class. Price is more a factor of location than type. Aesthetic appeal determines

whether a tract sells high or low.

Fort Bend County continues to be the focus of much of the new commercial development along the

U.S. Highway 59 corridor in the vicinity of Richmond and Rosenberg. The nearby communities of

Needville, Beasley and Fulshear are seeing increased demand for acreage homesites, although the

market for tracts being developed for single family residential subdivisions has slowed considerably.

As the population continues to expand, the demand for rural properties is expected to increase.

Interest in rural properties within Brazoria County, especially the areas outside of the Damon,

Rosharon, Angleton and Alvin markets, seem to have dwindled in 2008. The southern portion of

Brazoria County is typically low-lying, with dense brush, and is perceived as being somewhat

remote. This portion of the region has received the least demand with relatively few sales over the

previous year.

Central Coastal Prairie

Calhoun, Jackson, Matagorda, Victoria and Wharton Counties

In 2008, the Central Coastal Prairie region was characterized by an overall reduction in the number

of sales of rural properties. However, the reduction in number of sales did not result in an “across

the board” drop in value trends for the region. Quality properties, offering strong aesthetics with

good tree cover and/or live water sources, remained in high demand. The supply of marginal

properties, offering little in the way of mature tree cover or aesthetic appeal, began “to build” on

brokers listing sheets. Some areas, with high volumes of the “marginal” properties, have almost

become stagnant, with potential buyers looking over many more options before making a purchasing

decision or concentrating their search to areas with more abundant tree cover and recreational

appeal. Tracts, which offer good quality recreational whitetail deer potential, are limited and

command some of the highest premiums in the market.

Continuing the trend from previous years, overall planted rice acres continue to decline. An increase

in the buyers of tracts with irrigation potential was noted, with primary interests being the

development of waterfowl hunting and recreational landscaping.

As is with the previous year, rural residential tracts continue to be in high demand. Larger tracts

purchased, in 2005 through 2007, have been subdivided and sold off into ranchette-style properties.

Rural residential properties continue to be in limited supply.

Following a trend from previous years, it is noted that Houston is having a relatively significant

influence on north and east Wharton County, most notably in the Hungerford area. While Houston’s

presence is felt, it is not as dramatic as it is in the adjoining Fort Bend, Waller and Austin counties.

The improved and native range category is combined. Many brokers from surrounding areas, where

property available for sale is limited, have moved into this area.

North Coastal Prairie

Colorado, DeWitt, Fayette, Gonzales and Lavaca Counties

There is limited cropland in the counties above, with most concentrated in Colorado County. The

few sales, that have occurred, suggest there is still some increased interest in cultivated tracts and

prices have gradually increased throughout the year.

Improved pasture and native range sales were less active than in recent years, but were still changing

hands. For the most part, prices increased moderately, but with a noticeable slow down toward the

end of 2008. Recreational tracts, in the 50-acre category, continued to increase, although more

slowly than last year. North Colorado County saw a continued increase in demand, with buyers

spilling over from Austin County due to a lack of properties. The upper end of the prices shown for

native range, improved range and recreational land comes from the north part of Colorado County.

The southwest part of Fayette County saw a fairly significant increase in activity of large tracts and

with strong prices being reported.

Bellville and Brenham Area

Austin and Washington Counties

There is very little cropland in these two counties. No price difference is apparent between native

and improved tracts; the two categories have been combined for several years. The demand for

improved pasture and native rangeland mitigated somewhat in 2008. It seems asking prices

continued to increase, but that the increase in actual sales prices slowed considerably. With that

said, prime recreational tracts continue to command a premium.

Driving forces creating value are trees, hills and views. After pairing area sales, a desirable

recreational tract can sell for twice as much as an adjoining property due to aesthetics. The Region

Five grid has a scenic category that combines some or all of the characteristics. The area around

Sealy is predominantly flat, with less tree cover; this area sells for significantly less than the lands

to the north. Marginal tracts, around Sealy, began to show some weakness toward the end of 2008.

The recreational appeal of the rolling hills, to the Houston buyer, has resulted in a very strong

demand on the part of purchasers for “weekend” ranchettes in the 100 to 200-acre size. Prices for

this type property have risen dramatically over the last several years. While the price appreciation

has slowed, the demand for these tracts continues to be strong.

Region Five Contributors

Steven R. Gossett, AFM .................................................................................... 979.764.8566

Post Office Box 10407

gossett@suddenlink.net

College Station, Texas 77842-0407

Wade Kubecka, ARA .......................................................... 979.543.2078; fax 979.543.8120

Capital Farm Credit

wade.kubecka@capitalfarmcredit.com

1807 North Mechanic

El Campo, Texas 77437

Andrew Sirman, ARA ........................................................ 936.853.4845; fax 936.853.4851

Capital Farm Credit

andrew.sirman@capitalfarmcredit.com

2896 Greene Sanders Road

Pollok, Texas 75969

Wayne T. Young, ARA ....................................................... 936.439.0379; fax 936.436.0192

Capital Farm Credit

Wayne.Young@cfctx.com

624 FM 1791

Huntsville, Texas 77340

Region 5 - Southern Piney Woods, Coastal Prairies and Brazos Bottom

Land Use or Class

Value Ranges

Activity/Trend

Rental Range

Activity/Trend

Eastern Coastal Prairie and Southeastern Piney Woods

Rural Residential/Ag 50-150

$1,200 to $5,000

Slow/Stable

$10 to $15

Stable/Stable

Improved and Native Pasture

$1,000 to $2,500

Slow/Stable

$8

to $15

Stable/Stable

Bottom Timber

$650

to $1,000

Slow/Stable

Stable/Stable

Upland Timber

$1,000 to $1,750

Slow/Stable

Stable/Stable

Marsh

$350

to

$400

Slow/Stable

Stable/Stable

Southwestern Piney Woods

Rural Residential/Ag 50-100

$2,600

$8,000

Stable/Up

Improved and Native Pasture

$2,500 to $3,500

Stable/Up

$10 to $15

Stable/Stable

Bottom Timber

$1,200 to $1,500

Slow/Stable

$6

to $10

Stable/Stable

Upland Timber

$1,500 to $3,000

Slow/Stable

$6

to $10

Stable/Stable

Brazos Bottom

Irrigated Cropland

$1,800 to $2,200

Slow/Stable

$60 to $100

Stable/Stable

Dry Cropland

$1,600 to $1,800

Slow/Stable

$25 to $50

Stable/Stable

Improved and Native Pasture

$2,800 to $5,000

Slow/Stable

$15 to $20

Stable/Stable

Rural Residential/Ag 50-100

$2,700 to $10,000

slow/up

Houston Area

Improved and Native Pasture

$3,000 to $7,500

Slow/Stable

$10 to $15

Stable/Stable

Rural Residential/Ag 50-100

$7,000 to $15,000

Slow/Stable

Harris and Galveston Counties - Removed from grid as there is essentially no open land not impacted by development

Central Coastal Prairie

Irrigated Cropland

$1,400 to $2,200

slow/up

$60 to $110

Stable/Stable

Dry Cropland

$1,200 to $2,000

slow/up

$35 to $65

Stable/Stable

Improved and Native Pasture

$1,300 to $4,500

slow/stable

$10 to $20

Stable/Stable

Rural Residential/Ag 50-100

$1,800 to $5,500

slow/up

Coastal Prairie - North

Irrigated Cropland

$1,400 to $1,600

Slow/Stable

$45

$70

Stable/Stable

Dry Cropland

$1,400 to $1,800

Slow/up

$30

$60

Stable/Stable

Improved and Native Pasture

$2,150 to $4,400

Slow/Stable

$12

$20

Stable/Stable

Rural Residential/Ag 50-100

$4,000 to $10,000

Slow/up

Bellville and Brenham Areas

Scenic Recreational Land

$8,000 to $15,000

Slow/Stable

Rural Residential/Ag 50-100

$4,500 to $10,000

Slow/Stable

Improved and Native Pasture

$4,000 to $6,500

Slow/Stable

Sealy Area

$4,000 to $6,500

Slow/Stable

Victoria, Jackson, Wharton, Calhoun and Matagorda Counties

Gonzales, Fayette, DeWitt, Lavaca and Colorado Counties

Washington and Austin Counties

Liberty, Hardin, Chambers, Jefferson and Orange Counties

Walker and San Jacinto Counties

Brazos, Robertson, Burleson, Leon, Madison and Grimes Counties

Waller, Montgomery, Fort Bend and Brazoria Counties

$5

$5

$3

Transition Zone

Upper to Mid

Brush Country

Lower Brush Country

Coastal

Plains

Coastal

Bend

Rio Grande Valley

UVALDE

BEXAR

MEDINA

COMAL

GUADALUPE

WEBB

FRIO

DIMMIT

ZAVALA

LA SALLE

MAVERICK

ATASCOSA

LIVE OAK

WILSON

MCMULLEN

BEE

GOLIAD

KARNES

REFUGIO

KENEDY

NUECES

KLEBERG

SAN PATRICIO

HIDALGO

CAMERON

WILLACY

DUVAL

STARR

ZAPATA

BROOKS

JIM HOGG

JIM WELLS

N

E

W

S

Region

#6

REGION SIX – HILL COUNTRY, SOUTH TEXAS, COASTAL PLAINS,

COASTAL BEND AND RIO GRANDE VALLEY

GENERAL MARKET CONDITIONS FOR 2008

Prepared By

Merrill E. Swanson, ARA – Region Six Team Captain

Region Six is comprised of the southern portion of Texas including the southern fringe of the

Edwards Plateau, portions of the Coastal Plains and Coastal Bend, the South Texas Brush Country

and the Rio Grande Valley. Counties in this region are those between Comal and Cameron, on a

north/south basis, and between Refugio and Maverick, on an east/west basis. The region is bound

by the Gulf of Mexico on the east and the Republic of Mexico on the west.

Over the past decade, the South Texas region was one of the most dynamic land markets in Texas.

The region appears to have stabilized in late 2007 and early 2008.

• Market Activity – Like the second half of 2007, the 2008 market was “spotty” with a few

scattered “hot” areas. 2008 broker activity was reported to be moderate. Most sales volume

and demand were down from the 2005-2007 levels. However, a limited number of sizeable

transactions took place.

The meltdown of the capital markets, tightening of credit, November presidential election

and pending national recession have a number of buyers “on hold”, waiting to see what was

in store. The national economic crisis took a number of potential ranch buyers out of the

market as these individuals still in security-based investments and must wait for their

investments to recover before they can sell and move into an alternative investments of land.

A number of land sale negotiations did not lead to a consummated sale, even after significant

professional fees and time had been incurred. In fact, a number of ranch sales, in contract

with the title company, are not closing.

• Land Values/Land Pricing – Throughout most areas in South Texas, farm and ranch asking

prices, which were posted on electronic advertising mediums, have typically been reduced

on a regular basis beginning in the third quarter of 2008. Many of these ranch offerings were

aggressively priced and may be re-priced in closer alignment with the perceived level of

market value. Ranches, which were marketed at aggressive pricing, have suffered extensive

marketing periods.

It appears that there is a different perception of value between buyers and sellers. Most

buyers are resistant to current levels of asking prices and are typically insistent on a

significant price discount, while most sellers are not willing to reduce pricing to the

requested level.

Several sales and land offerings are under pressure to sell; however, this is not the majority

of available land for sale. Land values appear to be holding steady, for the most part, and

generally are in alignment with 2007 levels.

• Sellers – Long-term land owners have witnessed the highest level of rural land pricing that

they have ever experienced; as a result, some decided to sell. A number of long-term owners

may have large fragmented families. Many of the absentee co-owners may have limited

interest in the land. If the properties are bringing an economic return through oil and gas

royalty or crop production income, an absentee land co-owner may be more patient and

willing to hold on to the land. If there was only limited income, many absentee land owners

looked favorably on high land values and decided to sell.

Sellers were concerned over political risk and uncertainty related to the presidential election,

and a possible change in capital gains rates and estate tax rates. A number of land owners,

who were contemplating a sale, were motivated to take equity out of their farms and ranches

prior to a potential increase in capital gains taxes as well as a potential increase in estate

taxes. A number of sellers paid the capital gains tax rather than a tax free exchange because

they believe the rate will rise.

With the economy slowing, it is understood that there are certain ranch owners under

pressure to sell. Some of these investors are developers, owners of contracting businesses,

and others whose business has slowed. As a result, various assets, including ranches, are put

up for sale to supplement the required capital infusion for their businesses.

1031 Tax Deferred Exchanges continued to be fairly popular; however, as noted, certain land

sellers paid the capital gains tax. High land prices continued to put pressure on “land rich-

cash poor” owners for estate tax purposes. There continued to be estates that had to sell land

to pay estate taxes.

• Buyers – Investors and end users remain the two buyer categories and continued to be the

main sources of demand. Buyers include successful businesspeople in the various sectors

enjoying economic prominence ,including oil and gas, real estate and other fields. A number

of buyers may have sold a ranch and are currently looking for a replacement property.

Certain “ag” landowners in transition areas sold high-priced land and then re-invested in

replacement land in lower-priced areas. The impact of high petroleum prices often funded

ranch purchases by those in the oil and gas business.

Most buyers were very cautious and moved slowly and deliberately to close transactions,

with some buyers taking “a wait and see” attitude in light of national economic events.

Buyers appeared to be more price sensitive and looked in areas of better perceived value.

Certain buyers are back in the market looking at land and offering cash and a quick close,

but expecting a deep discount related to price.

High commodity prices shed favorable light on demand for farmland. Buyers of farmland

continued to be farmers. There was renewed interest by agricultural REIT’s.

• Demand for Ranches – Recreational demand continues to lead the way in the most coveted

hunting areas and spread into more traditional agricultural/ranching areas having native

game and/or other recreational opportunities. Demand for standard ranches was moderate,

with demand for “finished/turn-key” ranches being good as long as the price was not overly

aggressive.

Hunting ranches, with improvements and established game management present, continued

to command premiums; many investors wanted “ready to go” properties. As such, top end

ranches with all of the amenities sold while other more standard ranches are still for sale.

Standard ranches acquired for land infrastructure enhancement and later resale are requiring

longer marketing times and in a number of cases are still for sale.

Active ranch brokers reported a handful of active qualified buyers. There appears to have

been an increase in the number of farms and ranches advertised on the various online and

printed advertising mediums. Marketing periods for most land increased over 2007. The

market has changed from a “seller’s market” to a “buyer’s market”.

• Demand for Farmland – Farmland buyers were active and more so than in the past several

years with the farm economy being generally better than in many years due to recent high

commodity prices. High commodity prices encourage farmland producers and investors.

Some investors bought good farmland for a steady return, along with farm program benefits

and appreciation potential. Demand for farmland was stable to increasing, with land

typically purchased by farmers.

2007 was a good year for most farmers due to high commodity prices, with certain farmers

buying equipment and nearby land in 2008. However, the farm economy is somewhat mixed

with high fuel and input costs. If producers made a crop, they were most likely able to sell

at a good level of price; however, producer profits were tempered with high input costs.

There continues to be concern over political risk relative to the future direction of the USDA

commodity program, which has farmland investors and operators alike expressing some

reservations about investment decisions.

South Texas properties, with Conservation Reserve Program (CRP) payments, were in

demand. Bio-diesel and ethanol prospects have increased corn pricing, along with

corresponding farmland pricing and rents in the Midwest United States. As a result, there

has and will be an increased level of interest in the best farmland areas of South Texas.

Water rights speculation has inflated irrigated farmland prices in the farming areas near San

Antonio. A very defined water rights market is present in the Edwards Aquifer area, with

transferrable rights selling separately from the land and the base water rights. Markets for

water from the Carrizo Wilcox and Gulf Coast aquifers are also developing, as evidenced

by recent transactions in both resource areas.

• Demand for Subdivision Development Land – This market segment stabilized in 2007. Most

national home builders have slowed new development in most areas of Texas. Credit

tightening and sub-prime lending problems have impacted the residential real estate markets.

• Financing – Available credit to land buyers has tightened, with lenders being more cautious.

Interest rates rose. A number of existing ranch owners, who have debt, refinanced loans.

It is understood that the required equity portion of a financed transaction has risen for most

ag lenders. With the market slowing, owner-inanced transactions may be on the increase.

• Minerals – Most South Texas properties were offered with limited minerals or as surface

estate only. With oil prices increasing to approximately $140 per barrel, oil and gas drilling

continued to be very active through the third quarter of 2008. Leasing and seismic activity

were also active during the same time. When crude oil and natural gas prices began their

decline in late 2008, oil and gas drilling and leasing slowed. It is understood that certain

large mineral lease blocks were released and drilling programs were delayed or “put on the

shelf”. Drilling rigs are reportedly being stacked at the lower level of petroleum prices.

With a stabilized market, certain buyers are demanding partial minerals from sellers to

acquire land. Certain sellers are having to meet buyer demands related to minerals to

consummate a transaction.

Transition Zone between the Texas Hill Country and the Upper Brush Country

Atascosa, Bexar, Comal, Guadalupe, Medina, Wilson and Uvalde Counties

Historically, the primary investment motive for large tracts, in counties adjoining Bexar County and

the City of San Antonio, is for residential subdivision development. Uvalde County is less

influenced by residential subdivision pressure due to its location being over one hour west of San

Antonio.

Growth in West Bexar County has stabalized. National residential development companies have

extensive unsold lot inventories. East Medina County also experienced development pressure and

growth.

The proposed Texas A&M campus, on the south side of San Antonio, will have a positive effect on

south Bexar County and the northern sectors of Atascosa and Wilson counties, which are positively

influenced by the resurgence of interest in the south and west sectors of Bexar County.

The Toyota Tundra truck plant is in operation in South Bexar County. Land near Toyota increased

in value.

Demand for recreational land was fairly good. Live water features are a driving force for

recreational properties located along the edge of the Texas Hill Country. Weekend recreational

ranches are common in the Transition Zone due to the short driving distance to San Antonio.

Demand for farmland in Bexar, Comal and Guadalupe counties was stable, but not nearly as great

as for recreational or investment lands. Open farmland, in the San Antonio area, may be “prime”

for high density residential development as long as public utilities are nearby. Many open tracts of

farm and pasture lands are purchased for development. Overall, western Medina County and Uvalde

County generally have less intense land uses and good recreational appeal.

Water rights speculation has positively impacted farmland pricing in Bexar, Medina and Uvalde

counties. Irrigated farms with good Edwards water rights are in demand. Irrigated farms with

Carrizo irrigation water are more in demand today than they were last year, with an increasing

number of the transactions including a reservation of a portion of the water rights that are in the

Carrizo Aquifer.

The market for Edwards water rights, in Bexar, Atascosa, Medina and Uvalde counties, was

extremely active in 2007. In 2008, the Edwards Aquifer Authority reported fifty sales and twenty-five

leases of Edwards Aquifer pumping rights. Sales totaled just over 7,700 acre feet at prices mostly from

$5,000 to $5,500 per acre foot. Leasing activity totaled almost 2,300 acre feet, with approximately 665

acre feet going to irrigation, just under a 1,000 acre feet going to municipal use at prices up to $137 per

acre foot, and just over 600 acre feet going to industrial use at prices up to $500 per acre foot.

In addition to the Edwards activity, significant amounts of Carrizo/Wilcox aquifer water has been

sold and leased to San Antonio and other municipal users during 2008.

San Antonio Water System (SAWS) agreements with landowners in Gonzales County to lease just

over 3,900 acre feet of water from the Carrizo/Wilcox at $62.50 per acre foot, which will be paid

the first year that SAWS produces water. It is noted that there are escalation clauses. These leases

are for a twenty-year primary term and include a right of first refusal to the purchase the land under

which the water is located.

Upper South Texas (Upper to Mid Brush Country)

Dimmit, Frio, La Salle, Live Oak, Maverick,

McMullen, Webb and Zavala Counties

Recreational hunting is the primary source of demand for land – this area has an excellent reputation

for good trophy deer and upland bird hunting. Active land trading has generally leveled out.

Overall, demand and achievable sale pricing for ranches stabilized.

For a number of years now, land stewardship practices have been more focused on the balance of

livestock and wildlife. However, in some instances, new ranch owners are abandoning traditional

grazing of livestock and concentrating strictly on wildlife.

2008 was a severe drought year following the heavy rainfall year of 2007. Some ranches caught

some late summer rains, while others received almost none. Demand for “turn-key” game-managed

ranches continued to be strong for a select few.

A number of ranches are high fenced and game managed. Deer breeding programs, along with trap

and transport programs, are popular. Many ranches have MLD permits (Managed Lands Deer

Permits) which allow for extended hunting seasons and give land owners time to achieve wildlife

management goals. The deer operations are used to enhance trophy buck genetics. Hunting lease

prices remained strong, i.e., especially for ranches with good game management. As a result of

increasing hunting lease rates, along with the “hassle factor” of being a tenant on a highly regulated

property, a number of upper-end hunting lessees decided to buy their own ranches.

Subdivision development in the area has leveled out. Farmland pricing has stabilized.

Lower South Texas (Lower Brush Country)

Brooks, Duval, Jim Hogg, Jim Wells, Starr and Zapata Counties

Lower South Texas has a similar level of demand for land compared to Upper South Texas. This

is one of the most popular hunting areas in South Texas. Land prices have stabilized. Ranch

investors are willing to drive further to these good hunting areas, with hopes of finding lower land

pricing and large blocks of native land.

Farmland pricing is considered to have remained stable. Starr County farms, in the more remote

areas, offer certain recreational appeal, if they adjoin low fenced brush properties.

Coastal Plains

Aransas, Bee, Goliad, Karnes and Refugio Counties

This area has a long history of being popular with Houston and Corpus Christi investors, with

recreational lands being the most active category. Many Houston investors look closely at this area

because of a shorter drive, when compared to the balance of South Texas. The blend of live oaks

and South Texas brush found in this area is very appealing to a large market segment.

Bee and Goliad are the most active counties in this market. It is, however, noted that Karnes County

typically relates more to San Antonio investors. It appears that land pricing has generally become

consistent for the live oak covered portions of the area, from Bee and San Patricio counties up to

Jackson and Lavaca counties (just north/northeast of Victoria).

Coastal Bend

Kenedy, Kleberg, Nueces and San Patricio Counties

The primary demand is for recreational properties with deer and bird hunting amenities. Land rarely

sells in the lower portion of this area due blocks of large ownerships. San Patricio County land

pricing generally parallels land pricing in the adjoining Bee County and nearby Goliad County.

2008 was a fair crop year for area dryland farmers due to dry weather conditions. Demand for

farmland continued to be stable to increasing, with the higher commodity prices. Investors typically

are producers or agricultural investment groups. The best land rarely becomes available because

most of the farmland ownership is by long-term tenure. Demand for large blocks of farmland is

good, but there is a limited supply of “top shelf” quality farmland, especially in large tracts. With

low stock market returns, farmland is viewed as a long-term investment alternative that has a return

and some appreciation potential.

Rio Grande Valley

Cameron, Hidalgo and Willacy Counties

The rural portions of this three-county area are largely production agriculture driven, with the

demand for the best classes of cropland demonstrating increased demand. The farmland is generaly

purchased by producers or large corporate land trusts; demand for the best irrigated land is typically

equal to demand for the best dry cropland.

Various Rio Grande Valley realtors continue to report active interest in larger dryland tracts, in the

Harlingen/Raymondville area, with both prices and rents moving up. The better quality drycrop land

is often closely held and only a few transactions of any size have occurred. The unusually good

market conditions for Valley citrus products are as a result of relatively recent Florida and California

disasters; this situation has spurred new plantings, along with renovation of older plantings.

Expectations for continued good citrus market conditions, through 2009, are likely to encourage

additional investments in Valley citrus properties.

The market for Rio Grande water rights continues to be active; several recent sales of “river farms”

have occurred in which the water right were reserved by the seller and leased back to the purchaser

for an initial term of five years, without options to extend the leases. The holders of these rights

report that they anticipate significant appreciation in the value of the rights due to development

pressures. When land is taken out of agricultural production and developed, the developer must give

the municipality a specified amount of water rights. In many cases, the developer must buy water

rights on the open market to fulfill this need. Rio Grande water leasing, in 2008, was active with

over 16,000 acre feet reported at prices ranging from $50 to $100 per acre foot for irrigation water

and $200 to $600 per acre foot for municipal and/or industrial uses. Water rights sales generally

ranged around $2,500 per acre for Class A rights and with Class B rights in the $1,500 range.

In the recent past, a significant trend is for agricultural lands close to Edinburg, McAllen, Mission,

etc., to be converted into residential developments. However, much subdivision is on hold due to

“sub-prime” lending problems in the Rio Grande Valley. Demand for subdivision land is generally

flat. Subdivision development is less prevalent in Willacy County.

Recreational ranches still have excellent demand. There are few available ranches for sale in the

Valley due to the large, long-held ownerships in the northern reaches of the area. Many of the Rio

Grande Valley land investors are local buyers.

The construction of the “Border Fence” is underway in the McAllen area and is beginning in the

Brownsville area. This development is a source of significant controversy since the fence is located

north of the IBWC Levee and is limiting access to significant portions of the river farms below the

levee. The impact of this development is not yet evident on land values, along the river, but will

likely become clear as the fence is completed.

Region Six Contributors

Ryan C. Healy ...................................................................... 210.227.6229; fax 210.227.8520

Dugger, Canaday, Grafe, Inc.

ryan_healy@dcgappraisers.net

111 Soledad, Suite 800

San Antonio, Texas 78205

John Hodges, ARA .............................................................. 830.278.5221; fax 830.278.5024

Post Office Box 1213

jchodges2295@sbcglobal.net

Uvalde, Texas 78802

Robert A. Moran, ARA ...................................................... 830.896.3433; fax 830.895.4678

902 Jefferson

morans@ktc.com

Kerrville, Texas 78028

John P. Robertson, Jr. ........................................................ 210.227.6229; fax 210.227.8520

Dugger, Canaday, Grafe, Inc.

robertson@dcgappraisers.net

111 Soledad, Suite 800

San Antonio, Texas 78205

Merrill E. Swanson, ARA ................................................... 210.227.6229; fax 210.227.8520

Dugger, Canaday, Grafe, Inc.

meswanson@dcgappraisers.net

111 Soledad, Suite 800

San Antonio, Texas 78205

James B. Vine, Jr., ARA ..................................................... 210.696.8909; fax 210.696.1985

Vine and Associates

jbvine@satx.rr.com

6106 Vance Jackson #2

San Antonio, Texas 78230-3373

Fred Wells, ARA ................................................................. 830.665.5773; fax 831.665.5773

601 Monticello Circle

levi.dudley@sbcglobal.net

Devine, Texas 78016

Region 6 - Hill Country, South Texas, Coastal Plains

Coastal Bend and Rio Grande Valley

Land Use or Class

Value Ranges

Activity/Trend

Rental Range

Activity/Trend

Transition Zone

Class I Irrigated Crop*

$2,100 to $3,000

Stable/Stable

$75 to $150

Stable/Stable

Class II Dry Crop

$1,350 to $2,500

Stable/Stable

$20 to $60

Stable/Stable

Permanent Pasture

$1,750 to $2,750

Stable/Stable

Stable/Stable

Rangeland <2,000 Acres

$1,400 to $6,500

Stable/Stable

Stable/Stable

Rangeland >2,000 Acres

$1,350 to $3,500

Stable/Stable

Stable/Stable

Development Land**

$3,500 to $35,000

Down/Down

Stable/Stable

Transferable Edwards***

Aquifer Water Rights

$5,000 to $5,500

Active/Up

$99 to $140

Active/Up

Hunting Lease

$8

to $20

Stable/Stable

Value ranges are generally reflective of partial mineral transactions.

*Speculation on water rights in Bexar, Medina and Uvalde counties.

**A number of Bexar County area farms are being acquired for subdivision development.

*** 5 year leases $99 to *105/Acre Fee; 10 year leases $115 escalating to $140 Acre Feet in the last 5 year term.

Upper South Texas - Upper to Mid Brush Country

Dimmit, Frio, La Salle, Live Oak, Maverick, McMullen, Webb & Zavala Counties

Class I Irrigated Crop

$2,000 to $2,500

Active/Stable

$75 to $150

Active/Stable

Class II Irrigated Crop

$1,650 to $1,900

Active/Stable

$70 to $135

Active/Stable

Class II & III Dry Crop

$1,300 to $1,500

Active/Stable

$15 to $30

Active/Stable

Permanent Pasture/Improved

Pasture

$1,400 to $2,200

Stable/Stable

Stable/Stable

Rangeland <2,000 Acres

$1,300 to $2,850

Stable/Stable

Stable/Stable

Rangeland >2,000 Acres

$1,200 to $2,500

Stable/Stable

Stable/Stable

Hunting Lease (Rangeland)

$10

$20

Stable/Stable

Value ranges are generally reflective of partial mineral or surface only transactions; few tracts sell with significant minerals in this market.

Lower South Texas - Lower Brush Country

Brooks, Duval, Jim Hogg, Jim Wells, Starr & Zapata Counties

Dry Cropland

$900 to $1,800

Stable/Stable

$20 to $30

Stable/Stable

Rangeland <2,000 Acres

$1,300 to $2,700

Stable/Stable

Stable/Stable

Rangeland >2,000 Acres

$1,200 to $2,400

Stable/Stable

Stable/Stable

Hunting Lease (Rangeland)

$8

to $20

Stable/Stable

Value ranges are generally reflective of surface only transactions; few tracts sell with significant minerals in this market.

Coastal Plains

Aransas, Bee, Karnes, Goliad & Refugio Counties

Class II & III Dry Crop

$1,000 to $1,500

Stable/Stable

$25 to $45

Stable/Stable

Permanent Pasture &

Improved Pasture

$1,150 to $2,000

Stable/Stable

Stable/Stable

Rangeland <2,000 Acres

$1,700 to $2,750

Stable/Stable

Stable/Stable

Rangeland >2,000 Acres

$1,500 to $2,300

Active/Up

Stable/Stable

Hunting Lease (Rangeland)

$8

to $15

Stable/Stable

Value ranges are generally reflective of partial mineral or surface only transactions; few tracts sell with significant minerals in this market.

Coastal Bend

Kenedy, Kleberg, Nueces & San Patricio Counties

Class I Dry Crop

$1,650 to $2,250

Stable/Stable

$60 to $100

Stable/Stable

Class II Dry Crop

$1,200 to $1,800

Stable/Stable

$25 to $50

Stable/Stable

Rangeland

$1,700 to $2,700

Stable/Stable

Stable/Stable

Hunting Lease (Rangeland)

$10 to $20

Stable/Stable

Value ranges are generally reflective of surface only transactions; few tracts sell with significant minerals in this market.

Rio Grande Valley

Willacy, Cameron and Hidalgo Counties

Class I Irrigated Crop

$3,500 to $4,100

Stable/Up

$90 to $135

Stable/Up

Class II Irrigated Crop

$2,200 to $3,400

Stable/Up

$50 to $75

Stable/Up

Class I Dry Crop

$1,600 to $2,300

Stable/Up

$65 to $90

Stable/Up

Class II Dry Crop

$1,200 to $1,500

Stable/Up

$35 to $65

Stable/Up

Permanent Pasture

$1,500 to $2,250

Stable/Up

Stable/Up

Rangeland

$1,750 to $3,850

Stable/Up

Stable/Up

Hunting Lease (Rangeland)

$10 to $20

Stable/Stable

Value ranges are generally reflective of surface only transactions; few tracts sell with significant minerals in this market.

$150/AU

$150/AU

$150/AU

$150/AU

$150/AU

$150/AU

$150/AU

$150/AU

Atascosa, Bexar, Comal, Guadalupe, Medina, Uvalde and Wilson Counties

Live water features or subdivision development potential increases the achievable pricing throughout region.

150/AU

150/AU

150/AU

150/AU