An economic analysis of the dynamic land market system in the Edwards Plateau of Texas

Abstract

Rural land markets have experienced an increasing level of interest as a result of more participants, both agricultural and nonagricultural, and greater concern for the benefits available to property owners. The source of these benefits extends from the productive returns of the rural land to the aesthetic pleasure accompanying the rural environment. In conjunction with this interest in the marketplace, rural land has experienced rapid appreciation. This situation was aggravated by the uncertain economic conditions of the past few years which have caused land owners, lending institutions and others associated with the rural land market in Texas to reconsider the major determinants of value and the process of price movements. Improved comprehension of rural land market activity on an intra-regional level was a primary objective of this research. A group of nine countries in the Edwards Plateau Region was selected for analysis. These counties were: Bandera, Blanco, Burnet, Gillespie, Kerr, Kendall, Kimble, Llano, and Mason. Two specific objectives were identified: 1. To study the extent that rural land market prices are dependent upon exogenous factors not related to the agricultural productivity of the land; 2. To analyze the movements in rural land market prices and determine if behavioral relationships exist between contiguous counties of the study area. To illustrate the effect of various characteristics of the land and conditions of the land transfer on rural land prices an economic model was developed to examine the benefits from land ownership over time..