Aaron Layman

Aaron Layman, touring a model home in 2020.

First some stats. The real estate industry remains in recession mode when it comes to activity and sales volume. While prices remain near all-time highs, mortgage and real estate companies continue to cut staff as they adjust to diminished sales activity.

The city of Denton saw home sales activity fall 10% year-over-year in December. Pending contract activity plummeted 38.6%! What happened? Simple. The more affluent property owners and buyers who had been keeping the averages propped up for most of 2024 took an early vacation.

When you get your 2025 assessment in the mail this spring, remember what the housing market looked like on Jan. 1, 2025. Median prices in the city of Denton ended 2024 down 0.4% year-over-year. Average prices fell 6%.

With prevailing mortgage rates back near 7%, the local market reverted to income-based supply and demand fundamentals. There are only so many people who can afford a $400,000 or $500,000 home with current property taxes and insurance costs.

Denton home prices, December 2024

Affordability gap continues

The affordability gap in North Texas is still huge when comparing incomes to home prices. The December employment report showed that wage gains are still solid. The bad news is they have failed to keep up with the inflation of home prices by a wide margin.

Residential lease prices in Denton County were 1.4% higher than a year ago. Rent prices have basically gone nowhere over the last two years after the huge COVID-era spike. The continued appetite from investors created a lot of new rental supply in North Texas.

The result is that it鈥檚 currently cheaper to rent a Denton County home than it is to buy one.

The median rent on a two-bedroom apartment in the city of Denton fell 1.1% last month, according to Apartment List. Rents were down 4.1% from last year per the latest January 2025 report. Median rents for single-family homes in Denton are basically unchanged from last year.

Denton single-family lease prices, December 2024

RealPage antitrust suit

The Department of Justice has amended its complaint against Richardson-based RealPage for its antitrust lawsuit against the company. Six of the nation鈥檚 largest landlords are now named in the suit, and two additional states have joined the suit to fight algorithmic pricing of apartments.

鈥 the landlords 鈥 Greystar Real Estate Partners LLC (Greystar); Blackstone鈥檚 LivCor LLC (LivCor); Camden Property Trust (Camden); Cushman & Wakefield Inc and Pinnacle Property Management Services LLC (Cushman); Willow Bridge Property Company LLC (Willow Bridge) and Cortland Management LLC (Cortland) 鈥 participated in an unlawful scheme to decrease competition among landlords in apartment pricing, harming millions of American renters.鈥

The grift that keeps on giving

The 89th session for the Texas Legislature kicks off this week. Property tax reform will once again be a topic of interest. Spiraling property values and the general lack of affordability for homes has a lot of Texans concerned about their housing costs.

Many homeowners are quick to blame the local appraisal district for the increase in their property taxes when they should be focusing their attention on Austin. The Texas Legislature is where the property tax code sausage is actually created.

Here鈥檚 a simple litmus test for your Texas representative to see if they are truly serious about property tax reform. Are they willing to rein in the abuse of agricultural appraisals in Texas and the abuse of the 1-d-1 designation in the property tax code? If the answer is no, you鈥檒l know they aren鈥檛 serious about property tax reform. You鈥檒l also know they aren鈥檛 really interested in affordable housing.

The original 1-D agricultural appraisal reserved for owners legitimately employed in agricultural was a sensible idea. Real farmers and ranchers deserve the designation, and many of them depend on it for their livelihood. That designation in the property tax code dates back to 1966.

The more generous 1-d-1 designation didn鈥檛 arrive until 1979. The expanded eligibility removing the income and occupation requirements has quietly metastasized over the years while Texas legislators turned a blind eye.

Enter the COVID-era ramp-up of property values. Land values have skyrocketed across Denton and Collin counties over the last five years. Land values have doubled or even tripled across North Texas. But here鈥檚 the funny thing. If you look at the tax rolls, it鈥檚 almost like it never happened. Appraisal districts have wiped billions of dollars of valuable property off the tax rolls for some of the wealthiest owners in North Texas. It鈥檚 regressive taxation Texas style.

With the easily abused 1-d-1 appraisal, wealthy property owners, speculators and investors have flocked to the modern version of a tax-free real estate hedge fund in Texas. If you can make a parcel of land worth $2 million or more disappear from the tax rolls, that鈥檚 obviously worth something. The now widely abused 1-d-1 ag appraisal is now a 鈥減ay no property tax鈥 trading card for some of Texas鈥 wealthiest property owners who don鈥檛 make a living in agriculture.

Local home prices are being distorted as average home prices get skewed upward. This subsequently feeds into the appraisal district鈥檚 formulas on assessments across the county. The end result is that every homeowner across Denton County not enjoying that special 鈥渁g鈥 assessment ends up footing the bill for those who are receiving it.

Regular homeowners in the city of Denton might be shocked to know they are paying effective property tax rates that are triple the rate of their wealthier millionaire land-owning neighbors.

The charade of 1-d-1 appraisals has allowed many millionaires in North Texas to pay effective property tax rates below a half of one percent. That鈥檚 real property tax rate compression!

Many Texas legislators won鈥檛 even mention this ugly fact when they are discussing property tax reform. This is how you鈥檒l know they are playing you.

The gaping loophole of the 1-d-1 agricultural appraisal is providing massive tax breaks to many Texas residents who don鈥檛 need the help. That needs to change. That change begins by having honest conversations about the grift hiding in plain sight.

AARON LAYMAN is the owner-broker of Aaron Layman Properties LLC and an adjunct professor at the University of North Texas. Contact him at 940-209-2100 or sales@aaronlayman.com or .

Originally published on , part of the .