Aaron Layman.

Denton County home sales remained strong in April, rebounding above levels seen last year and slightly better than the Dallas-Fort Worth average.

A big drop in mortgage rates helped to improve the affordability of homes in the area, and the new home market in particular has reaped the benefits of lower mortgage interest rates in 2019. Mortgage rates are roughly 40 basis points lower than where they stood at this time last year.

Despite robust sales in April, the stimulus from lower rates appears to have run its course. Pending sales (contract) activity in April cooled off, showing little to no growth compared with last year, despite a very favorable year-over-year rate decline.

It is looking increasingly likely that the North Texas home market may have peaked a bit early this year as demand was pulled forward into the first quarter. Contrary to the sell-side establishment spin that hedge fund and real estate industry pundits are floating, the U.S. consumer is not doing so well.

One of the more interesting charts I recently posted shows that personal interest payments by U.S. consumers have spiraled higher, jumping at an annual rate of 16% to over $368 billion. U.S. consumers are increasingly drowning in debt, and they depend on ultra-low interest rates to service it.

The city of Denton saw its May sales tax payment drop by 11.8% compared with last year. The YTD sales tax payments to Denton are down 4.2%. Anyone telling you that U.S. consumers are healthy is selling a false narrative.

Speaking of false narratives, the old rule about six months of inventory being a balanced market needs to be laid to rest. It is ridiculous that the real estate industry — and The Dallas Morning News — keeps floating this metric as though it is still true.

North Texas home inventory stands at 3.2 months of supply. Supply is at 3.2 months in Denton County and only 2.4 months in Denton.

You would have to be a fool to think that six months of inventory would not result in armageddon for area home sellers in today’s market. Six months of home inventory in North Texas would now imply an economic recession in DFW, and possibly worse in Denton.

Technology has impacted the real estate industry in numerous ways in the past decade. Homes are listed faster, get to escrow faster and close faster than they used to. A good home that is priced to sell can be in escrow before the professional glamor photographer even gets the pictures to the listing agent.

I’m old enough to remember when home shoppers browsed the catalogs of listings supplied at the offices of brick-and-mortar real estate firms. Today’s buyers just scroll the listings on their phone with expectations of instant gratification.

Homebuyers and sellers are forcing the industry to adapt, slowly but surely. The 6% commission is dead, but the 1.3 million members of the National Association of Realtors aren’t going to give up without a fight. The NAR is still one of the most active lobby groups in Congress.

It may not make any difference. A class-action lawsuit filed in March could have serious consequences for the real estate industry and the traditional model of real estate brokerage. The suit was filed by some of the same lawyers who took on big tobacco.

The NAR has said the complaint is baseless, but change continues to knock on the door. Sellers already have a number of options in the marketplace to avoid paying a 6% commission when they sell a home. Virtual brokerages, algorithm-based buyers and alternative platforms continue to bring change to the industry, disrupting the old commission structures once considered sacred.

The problem for the old guard is that it’s difficult to justify those lofty commissions when homes are dramatically more expensive than they were 10 years ago.

Some of these new platforms envision themselves as the Uber of real estate. That should ring some alarm bells for the NAR and its membership. As we have seen in recent years, the gig economy hasn’t worked out too well for the drivers providing the actual service.

AARON LAYMAN is the owner-broker of Aaron Layman Properties LLC. Contact him at 281-935-2889, or

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