Home Values Push Up Net Worth

I just realized it's been almost a week since I wrote my last entry. When you have a new baby in the house, time just flies. More accurately -- it evaporates! And my sleep-deprived spouse doesn't have much sympathy for the fact that I don't have time to get things done.


On the news front, there are some interesting new facts out there. Apparently, the fast rising prices of our homes are making us rich -- at least on paper. The rising value of U.S. homes boosted the net worth of American households to a record in the fourth quarter. This is a very nice benefit for those of us who have jumped into the housing market. However, like stocks, you don't really have money in your pocket until you sell, and when you sell your home, you have to buy another -- in the same high-price environment that you just sold in!

In any case, don't bank on your new riches just yet. Higher interest rates could slow home-price appreciation in the months ahead. And there continue to be signs that the market is cooling. However, it appears to be cooling as opposed to crashing, and for this we can all be thankful.

One thing that we have in mind as the market cools: it often makes it easier to take a step up in houses. While the houses at the lower end of the market lose less of their value, the homes at the higher end lose more -- at least on a percentage or proportion basis. Depending on what kind of house you own now, you could be in that range where you don't lose a lot as homes depreciate, but the next step up in house size or status does.

We've decided we might just upgrade to that small farm we've always wanted. Without question, we are going to need some more room now that Baby makes 4.


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