Land prices in Texas seem to be setting record after record. In 2005, the hike in prices stopped at a record $1,483 per acre. This effectively means land prices were up 16 percent from 2004 and 76 percent over 2000 prices. Nonagricultural demand continued to drive markets, and 2006 promises to be another banner year for Texas land markets.

Nonagricultural buyers who wish to avoid capital gain taxes are dominating the Texas real estate scene. The 1031 exchange allows an owner to convert one real estate investment into another without the gain being taxed. A growing number of Texas land market transactions involve buyers from outside Texas who want to benefit from Section 1031 exchange provisions. reports:

Buyers buy now to avoid being priced out of the market as increasing demand drives prices up. These circumstances have led market participants to repeatedly note a dearth of quality listings and long lists of potential buyers.