Forget the Suburbs: In Texas, the Race for Rural Property Is On

By Richard Barrington
Local Lender Columnist
Oct 15, 2007
The headlines make the current real estate market seem like a scary place. Mortgage interest rates are rising. Sales of new and existing homes are falling, while mortgage foreclosure rates are soaring. Amid all this, it is important to remember that such trends are often cyclical.

Indeed, looking at a report on Texas rural property prices produced by the Texas A&M Real Estate Center suggests that a longer-term trend may be taking shape--at least in Texas.

The Growth in Texas Rural Property Prices

The average price-per-acre for rural land in Texas rose 23% in 2006, reaching an all-time high. This reflects a continuation of a surge in transaction activity for rural land in the state that began in 2002.

While the trend toward rising rural land prices is widespread, there are notable disparities in rural land prices across the state. The highest prices are clustered around the more populated sections of East Texas, suggesting that some property owners are redefining the traditional suburban population belts, with the expectation that those belts will expand outward over time.

Beyond Current Mortgage Woes and Rising Rates

The demand for rural land in Texas might reflect a realistic assessment of future needs, or it might simply reflect speculation. There's always a good chance it is a bit of both, but in either case it reflects long-term thinking which may help other real estate buyers look beyond short-term problems in the market brought on by mortgage foreclosures and rising interest rates.

To put it more succinctly, there are still people putting their money on the long-term demand for real estate. That confidence may help more people look beyond cyclical credit and interest rate disruptions.

Source
Texas A&M University Real Estate Center

About the Author
Richard Barrington is a freelance writer and novelist who previously spent over twenty years as an investment industry executive.