The North Texas housing market detached from the underlying economy in July. Median home prices jumped 8.8%, and the average price of a Denton home skyrocketed 14.8% to an all-time high of more than $316,000. Closed sales rose 12% for the month, and pending sales jumped 15% in July. The Denton housing market showed incredible resilience despite 3,647 fewer people actually having jobs, according to the latest report from the Texas Workforce Commission. The supply of homes in July was down 27.6% from a year ago.

The city of Denton had plenty of company in terms of buyers making up for lost time in the pandemic. Argyle saw median home prices rise 29.7%, with average prices up 22.9% compared with a year ago. Dallas saw median and average prices rise 14.5% and 19.9%, respectively.

Denton County homes were flying off the shelves last month as home sales rose 21%. Pending sales rose 15%. Median home prices rose 5.4% to a new record of $339,950. Average home prices climbed 5.1% to an all-time high of $393,0442.

The July housing numbers were a shining example of the power of central bank liquidity flows. The economy has experienced a modest rebound, but the U.S. just experienced the 20th consecutive week of unemployment claims of a million or more. Monumental efforts from the Federal Reserve to prop up the economy and asset prices managed to save the summer home-selling season. What follows is a really big question mark.

All of this new liquidity from the Federal Reserve comes with a big price tag. One person’s asset is another person’s debt. The debt obligations continue to grow. U.S. wealth and income inequality were already near record levels prior to the pandemic, but the COVID-19 bailouts have taken things to a whole new level. Amazingly, the Powell Fed continues to insist Federal Reserve policies are not contributing to inequality.

“It’s difficult to get a man to understand something when his salary depends upon his not understanding it,” Upton Sinclair said.

In addition to reigniting speculation in the housing market, the Federal Reserve is also propping up zombie corporations with negative cash flow and sending the stock market to new highs. Some of the best performing stocks in 2020 are companies with no actual profits.

To add insult to injury, the Federal Reserve has been buying the bonds of some of the biggest companies on the planet, including Apple, Microsoft and Walmart. Congress can’t seem to agree on continued pandemic assistance for American workers, but the Fed is able to backstop billionaires with corporate bond purchases. Recent figures from the Fed’s Main Street lending initiative show 13 companies approved for just $92 million in value. That’s a far cry from the supposed $600 billion in lending capacity for the program. With stocks and home prices at record highs, it seems the Federal Reserve isn’t really interested in protecting small businesses or front-line workers.

It takes an enormous effort to prop up the show on Wall Street and distract the American public from the underlying economic damage. The Federal Reserve’s 2019 budget shows over 19,000 Fed employees and a whopping $2.3 billion paid out in salaries last year. Table 13 in the latest publication of the Federal Reserve budget shows the Fed’s payroll is the poster child for institutional bloat. The Federal Reserve now has 1,707 “other officers” earning an average salary of $246,488 per year.

In a recent interview, Lacy Hunt reiterated his warnings about the misguided stimulus measures from the Federal Reserve. By propping up zombie corporations and piling endless sums of debt onto an already huge pile of debt, the Fed is thwarting the natural process of creative destruction while incentivizing moral hazard. Sadly, the Fed doesn’t seem to care.

As Pam and Russ Martens recently detailed at Wall Street on Parade, Fed Chairman Jerome Powell had several private phone calls this year with fund manager Blackrock where they were “exchanging information.” Blackrock landed several no-bid deals with the Fed as part of the pandemic bailouts, and Powell himself has upward of $24 million invested in Blackrock funds.

They. Aren’t. Even. Pretending.

What does this have to do with the Denton housing market, you might ask? More than you can imagine. For better or worse, the housing market is inextricably tied to the endless supply of liquidity from the Fed. The stimulus interventions from the Fed continue to get larger, while the economic boost provided by them continues to shrink. It all works until it doesn’t.

Record low mortgage interest rates helped to keep those monthly payments manageable last month even as prices were blowing out to new highs. There’s a reason Jerome Powell isn’t thinking about raising rates any time soon. Any rise in rates with asset prices at stratospheric levels would be extremely problematic for the housing market and the economy in general.

The Fed gobbled up a huge chuck of U.S. Treasury securities and mortgage-backed securities as its balance sheet has blown out with pandemic damage control. Next will come the reckoning as the declining marginal revenue product of all this new debt comes home to roost. Someone is going to get stuck paying the bill, and the lobbying machines are kicking into high gear so average homeowners and working Americans can be left with the tab — again.

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

Recommended for you

See what people are talking about at The Community Table!