TheLandJournal.com

I spent all day last Thursday at the 17th Annual Outlook for Texas Land Markets hosted by the Texas A&M Real Estate Center. If you have never attended this event, you should really put it on your calendar for next year. They do a great job. One stat that leaped off the page to me was that land in Far West Texas (Trans Pecos) appreciated at 71% in 2006. Dr. Charles Gilliland did a great job in discussing several economic factors that drove these land prices up including: ethanol, increased interest in mineral rights and mineral leases, and influx of buyers that want to get away from the incredible growth that is going on in most urban markets. These all make perfect sense, but I think there may be another factor that drove up these land values.

I would dub it the “Name A Star” approach to rural land buying. You have all heard or seen the commercials for the companies that allow you to purchase the naming rights to a specific star. No one will ever go to this star, but they can brag to their buddies that there is a star named after them. Well if you have ever been to far West Texas, Southern New Mexico as well as parts of Arizona, Nevada and Utah you realize that the landscape is not that much different than the surface of the moon. These are extremely dry and desolate areas of our country and land prices are very low ($50 to $300 an acre low). Because of these factors we have seen a good number of online real estate companies start up over the last few years that market cheap land for sale. They go out and buy up big chucks of these desert type lands, break them up into pieces from 10 to 300 acres and resell them at 2 to 4 times what they paid. They market these properties online to buyers that many times never end up going to the properties that they purchase. Many times buyers from out of state purchase 50 acres in far west Texas from one of these online real estate companies for $5,000 site unseen. Much like buying a star, these buyers do this just to say that they own a ranch in Texas. These buyers from California or Dallas or Florida don’t plan to ever visit this land, but like to say that they own a ranch in far west Texas. There are websites that keep popping up that position them selves as real estate consultants that both market these properties and promote the benefits of investing in land. Some of these new online companies look almost like a multi-level marketing operation. With these properties appreciating at 71% annually it is hard to be very negative about these companies. Many people find the beauty in these arid landscapes, but with out power, water, fencing and in many cases road access it is hard to argue that these properties have many practical uses. I think that the influx of the online market is one of the major factors in driving these prices up.

What do you think? Add your thoughts by clicking on “Comments” below.