Buying Rural Land in Texas by Gilliland Charles E.;

Author:Gilliland, Charles E.;
Language: eng
Format: epub
Publisher: Texas A&M University Press
Published: 2012-08-15T00:00:00+00:00

6

Evaluating Economic Influences and Trends

A tree grows between paddocks at Lane’s End Farm.

Photograph by Charles E. Gilliland

Land value arises from the configuration created by the current social setting and the resource endowments found on the land. Together they form the basis of activity that generates returns to landowners. The array of current land prices reflects a summary of individuals’ assessments of the value created when the land is dedicated to their envisioned uses. Buyers reveal their personal estimated value through their offers to buy. Presumably, those offers would extend up to the highest valuation of his or her planned use. Those individual assessments presumably also incorporate personal forecasts of value growth anticipated from projected future uses. Essentially, the market serves as a medium communicating an array of prices reflecting individual valuations by both buyers and sellers, given an anticipated economic and social environment.

Before making a land purchase, potential buyers should ask a series of critical questions about current and future social and economic conditions that could affect the buyer’s ownership experience, the value of the land, and the ultimate disposal of the property. What type of economic environment is supporting current price levels? Will the local community thrive and expand into the countryside? How will in-migration contribute to future growth? Do area residents earn enough to be able to pay property taxes and keep up with maintenance costs? Will future conditions lead to higher prices or declining values? Each potential buyer must formulate answers to these and other questions as they evaluate prospective sites for purchase.

To avoid the risk of harboring unrealistic expectations, potential buyers should evaluate how current and potential future conditions could affect the set of assumptions they have made about candidate properties. By consulting a wide array of resources, a potential buyer can assess the apparent reliability of their expectations. Although many in the public believe they have a firm grasp of economic developments, checking real facts can help to dispel unrealistic hopes. Examining these influences in their current configurations provides a context for today’s economic performance, while examining trends in the past can offer insight into how the parameters might vary in the future. In short, the buyer can gain an appreciation for the contemporary economic context and an appreciation for which economic influences might substantially affect forecast conditions.

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