Broker Check

What is Happening with Housing?

February 19, 2024

My family and I are in the process of moving. Our 2000 sq feet had been great, but between my wife and four daughters under 10, it's time to upgrade. My brain is hardwired to see a home as an asset to be measured and invested in. My wife's brain sees us as farmers who cannot live complete lives until we have a dozen chickens, two mini cows, and a roaming band of goats. I still need clarification about when I signed up to be a farmer, although clues kept appearing, such as fresh daily sourdough and elderberry syrup regularly being concocted in my kitchen. So here is the challenge: what is a home worth?

The primary residence is one of the largest concentrations of net worth in your life, so making good decisions along the way is critical. First, you must consider that assets, especially homes, price on cash flow.

That means that the value of your home is based on what people can afford to pay monthly. As rates change, so does the value of your home. As almost anyone who has bought a house knows, the starting point for your payment is "P+I," which stands for principal and interest.

If interest rates go up, that means that "I" will be a larger portion of the payment calculation, and the only way to offset it is to reduce the "P," which results in the seller having to accept less for the sales price. 

This brings me to my point: rates are rates, and you and I have no control over where they are. Since rates are generally universal, they have a way of repricing the entire housing marketplace, except for new construction. An interesting thing is happening in new construction where builders are "buying down rates." There is a QR code below where I explain this in greater detail, so check it out. We'll pause this article while you do it.

Real Estate Market from the Perspective of a Financial Planner (

Welcome back! Now that you are a pro at how new builds buy-down rates, you can predict what I will say. The house you are looking for should be one you can and want to live in; beyond that, it should be one you can realistically expect to build equity in! You take that equity and roll it into a new house.. and then again.. and before you know it, you live on a farm with your wife, who has convinced you we need geese among the other animals to alert us to intruders—fun fact: Ancient Rome used guard geese because of their aggression and noise making abilities.

The main takeaway is that when looking at buying a house, really understand and do the math for yourself. This is one of the many things we are ready to help you with as comprehensive financial planners. Reach out and make sure your house and other assets are in line with your long term goals!