Two thousand twenty-two marks the 30th anniversary of Fay Ranches and ten years since we forged our Strategic Alliance with Republic Ranches. Thirty years certainly signifies our ability to weather some storms and grow with discipline. I feel like we’re just getting started, and I’m having more fun now than ever, thanks to the wonderful people I work with and our amazing clients.
It is always challenging to characterize the land market with limited sample size. Unlike residential real estate, there isn’t the deal flow nationally to make accurate short-term evaluations of the market. However, it is now mid-September. I’ll provide insight into the land market in 2022 compared to 2021 based on nine months of activity.
The frenetic pace of 2021 has dissipated, thank goodness. However, we are still experiencing strong demand and remain short on supply. In 2021, Fay Ranches and Republic Ranches together closed over two billion dollars in land transactions. In 2022 we are on pace to equal this production based on YTD closed transactions and the deals we have under contract. Our gross revenue so far, year over year, is 2% less than in 2021.
It will be interesting to see if the land market slows down in 2023. An investment in land has always been more stable than residential. We are not affected by interest rate increases. Due to the subdivision of land around urban and suburban areas, and our clients’ propensity for aggregating, less land is available every year. The diminishing supply of land contributes to its market stability and long-term appreciation more than any other factor.
An interesting new market condition that has impacted the land market in the past three years is the dramatic increase in the audience exposed to land as an investment due to Covid and the upheaval in the social and political fabric of the United States. The influx of people looking to land as a means to escape and insulate their families and keep them safe has increased tremendously. The conditions that caused this phenomenon do not appear to be dissipating.
An increase in demand and a decreasing supply may sustain the land market through the likely impending downturn in the residential real estate and securities markets.