Land in Far West Texas had the largest decline in price per acre out of any region in the state in 2016, according to a study released by the Texas Association of Realtors. The price per acre fell from about $3,700 in 2015 to $1,300 in 2016—a drop of almost 65%.
The study says this price drop can be attributed to the downturn in the oil and gas market.
But the oil industry’s presence in Far West Texas has also created an increase in the volume of land sold in the area. Tracts of land ranging from 500 to 8,000 acres were up by 29% in 2016.
Charles Gilliland, an economist at the Real Estate Center at Texas A&M University, says that while the rural land market is typically tied to the overall economy, West Texas land prices are being driven by a wild card: oil.
“There are purchases out there that I would probably describe more as industrial usage rather than farm and ranch, or recreational usage,” he says. “For example, ranches that sell because they have a big deposit of the right kind of sand on them, that’s used for fracking.”
For properties rich with resources used in oil production, “the sky might be the limit,” according to Gilliland.
The Texas Small Land Sales Report analyzes data across Texas four times a year. The next report will come out in September.