With fall fully in swing and football tailgates quickly making way for holiday parties, chances are, the number one conversation piece at your next social gathering: the housing market. Call it a sign of the times, but it appears that America’s favorite current form of window shopping – and source of neighborhood gossip – is Zillow ®.
Home prices have shot through the roof since the summer of 2020 , and despite mortgage rates now sitting at the highest levels they’ve been since 2000 , prices have barely budged. While much has been written about difficulties for first time homebuyers in this market environment, existing homeowners also face a challenging set of concerns:
- Should I lock in the gains on my house before the market turns?
- Should I take this opportunity to downsize?
- Should I put off moving? I can’t give up my 3% mortgage.
These are valid concerns, and attempting to time the real estate market can be just as perilous as timing the financial markets. However, in what may be unexpected advice from a wealth management firm, it’s important to not reach conclusions about your home solely from an investment lens. Your house may happen to be one of your largest investments, but it’s also your home. It’s the setting for many of life’s greatest moments. It’s where your daughter learned to ride a bike. It’s where the backyard hosts the family’s annual Thanksgiving game of two-hand-touch. It’s where your dog eagerly awaits your arrival home from work each day. Call it memories or nostalgia, but these things hold value – even if they have not been incorporated into your Zestimate® .
Of course, there are also great reasons to move into a new home. Maybe your family is growing, and that 3-bed, 2-bath starter home just won’t cut it anymore. Maybe you’ve accepted a new position and need to be closer to your future office. Or maybe your kids have embarked on adulthood in a new city, and you’d like to stay close by. The fact remains: your life is not a spreadsheet, so don’t let a spreadsheet run your life.
If you’d like to purchase a new house, there are two essential questions you should ask:
- Do you like it?
- Can you afford it?
That’s really it. This isn’t to say that the return on your house won’t be affected by the macro environment around the time of your transactions. They will. Rather, this is an acknowledgement that you purchased your home for the life you want to live first and as an investment second. A higher return is nice, but let’s not have the investment tail wag your life’s metaphorical dog.
At Regent Peak, we believe your home is much more than an investment opportunity, so make sure you are looking at all of life’s considerations before making any long-term decisions.
 Trading Economics, “United States S&P Case-Shiller Home Price Index” (https://tradingeconomics.com/united-states/case-shiller-home-price-index)
Trading Economics, “United States MBA 30-Yr Mortgage Rate” (https://tradingeconomics.com/united-states/mortgage-rate)