Supported by a strong regional economy, sales prices for real estate in Grimes County defied the national trends and showed significant increases from 2006 to 2007.

Increases in population, jobs and incomes in areas surrounding Grimes County—- the Greater Houston area, Montgomery County, and Bryan-College Station—- kept the regional economy strong while other sections of the country experienced slowdowns in economic activity.

Only the test of time can determine how the local real estate market will fare in the future against a backdrop of declining national economic indicators; and it won’t be long before the results are in since the local market historically lags behind developments in the broader markets by several months to a year.

Vacant rural acreage and residences on acreage showed the largest increases in prices while single family residences showed modest gains, according to data collected by the Grimes Central Appraisal District. Because mandatory disclosure of sales information is not required in Texas, the appraisal district does not have access to the sales data for every transaction. Therefore, the district’s data is based on a sample of the total number of transactions that occurred.

Rural acreage

Developers, investors and recreational buyers combed over Grimes County in search of rural land in 2007 as sales prices climbed from an average of approximately $4,320 per acre in 2006 to about $5,200 per acre in 2007 for transactions of vacant tracts of 10 acres or greater in size. The lowest 2007 sales price was less than $2,000 per acre and the highest 2007 sales price exceeded $13,000 per acre.

The average sales prices for rural acreage tracts less than 10 acres in size increased from about $5,050 per acre in 2006 to about $8,190 per acre in 2007. The lowest 2007 sales price for tracts in this category was less than $3,000 per acre and the highest 2007 sales price was in excess of $14,000.

The overall rural land market was dominated by sales of smaller tracts in both years with relatively few large tracts transacting. Many of the larger tracts of land are traditionally tightly held by long term owners who have little or no interest in selling their property. There was also an absence of highly improved properties in the marketplace. Land in the southern part of the county continued to bring the highest prices, but the gap between that area and the central and northern areas of the county appears to be narrowing.

The most prevalent methods of financing rural land were cash sales or sales with substantial down payments with financing being provided by a third party such as bank or other lending institution.

Subdivisions

Developers continued to carve out new lots and small tracts in diverse developments in several areas of Grimes County during 2007.These new subdivisions, along with those established in the last couple of years, are the highest quality properties that have been developed thus far in Grimes County.

The strongest trend emerging was the development of premium single family residential lots and tracts in communities—- most of which are gated—- with paved streets, utilities, and comprehensive building restrictions. Sales prices for the lots in these subdivisions typically ranged from $35,000 per lot to around $100,000. The sales prices for the acreage tracts in premium subdivisions generally ranged from about $11,000 per acre to more than $20,000 per acre.

Another trend is the development of small acreage subdivision tracts on land that was formerly owned by the large timber companies. Some years ago, all of the major timber companies sold their holdings in Grimes County and some of those properties have been developed in the meantime. Typically, these subdivisions have building restrictions and are composed of tracts in the range of 10 to 20 acres on all weather roads. They ranged in price from about $6,500 per acre to about $8,500 per acre.

Single family residential

The average price for single family residential properties—-basically houses on lots—-increased from $99,660 in 2006 to $107,160 in 2007, or about 7.52 percent.

Affordability was the key word as the single family market in both years was marked by a heavy presence of small, fair quality frame houses and somewhat larger average quality brick residences with fewer large, high quality homes being transacted. These properties were located throughout the county being mainly located in the City of Navasota, the small towns, and rural subdivisions.

About 60 percent of the single-family transactions were either cash or conventional financing with a down payment while the remaining sales were financed with a zero down payment. Without access to all of the financing information, it was difficult to tell, but apparently there was only limited use of unconventional or “sub-prime” financing for houses.

Most new construction was being done on a custom built basis with only a small number of houses being built on a speculative basis.

RURAL RESIDENTIAL

The average price for rural residential properties—— those with residences situated on acreage tracts—— increased from $240,560 in 2006 to $ 312,240 in 2007.

The quality of rural residences runs from small square footage houses of moderate quality to large, custom built homes. These residences are located on acreages of varying size throughout different areas of the county.

Buyers for these types of properties, like those for vacant rural acreage, were expanding their market area from the southern part of the county to the middle and northern parts and financing was typically cash or third party financing with a large down payment.