Guest Post by Peter Reagan
For many American families, the largest financial asset they own isn’t sitting in a retirement account.
It has a roof, a water heater, a property-tax bill (and at least one closet nobody wants to clean out).
It is the family home.
For good reason! Homeownership has helped millions of Americans build wealth over time. A paid-off home can provide stability in retirement. Home equity can become a source of financial flexibility when expenses rise or life changes.
But there is a catch we do not discuss often enough: Home equity is not cash. It is wealth locked inside the walls.
To access home equity, a homeowner usually has to sell the house, borrow against it with a home equity line-of-credit (HELOC) or otherwise transform that equity into spending money. And access to that equity is not guaranteed. Each of those options depends on economic conditions outside our control.
If you’re a regular reader, you already know I pay a lot of attention to both of America’s two favorite assets. That includes regular check-ins on the state of the housing market.
This is why the latest single-family housing numbers caught my attention. I think they’re worth your attention as well, especially if you’re nearing retirement and expecting home equity to help fund the next stage of your life…
Reuters reported that U.S. single-family homebuilding fell for a third straight month in June, while permits for future single-family home construction dropped to their lowest level in 10 months (via Yahoo Finance).
The Census Bureau’s June construction report shows the same split:
Here’s why I’m drawing a line between multi-family and single-family homes: An apartment building and a starter home do not serve the same purpose in the housing market. “Multi-family” projects are almost exclusively apartment buildings and condominiums.
That’s not to say multi-family housing construction is inherently bad. A new apartment building may give renters more options, maybe even lower payments. That can be helpful, especially in areas where housing costs have become painful.
But a single-family starter home plays a different role. It’s the first rung on the homeownership ladder. When a younger family buys one, that may eventually free up another rental. Then, later, when that family moves to a larger home, the starter becomes available for someone else.
That normal turnover keeps the housing market active and flexible.
This means, when single-family construction slows, the ladder gets harder for new families to climb.
And when the ladder gets harder, everyone feels it eventually – even those of us who thought our homes would be easy to sell when it’s time for retirement.
The housing market is dealing with two major challenges right now.
The first is affordability. This is pretty straight-forward: The majority of American families cannot afford a median-priced home. You can argue that families aren’t making enough money, or that home prices have risen too far, too fast.
Either way, the result: Homes are less affordable today than at the peak of the mid-2000s housing bubble.
The Case-Shiller National Home Price Index is up over 50% since 2020. In other words, home prices remain out of reach in many parts of the country.
Second, mortgage rates are much higher today than the ultra-low rates many of us locked in several years ago.
The 30-year fixed mortgage rate averaged an 11-month high of 6.55% this month, according to Freddie Mac.
That is not just a buyer problem.
It is also a seller problem.
A homeowner with a 3% mortgage may want to move, but moving could mean giving up that old rate and replacing it with a new loan at roughly double the interest cost.
That is the rate-lock effect.
Yahoo Finance described the same dynamic earlier this year. The basic idea is simple. Many homeowners are staying put not because their current home is perfect, but because their current mortgage is too good to give up. We’re talking about a 25-30% increase in monthly mortgage payments due to higher rates alone.
That obviously reduces turnover in the housing market. A family that might have moved from a starter home to a three-bedroom, two-bathroom family home stays put instead. Their starter home never reaches the market. That means a first-time buyer keeps renting. And it also means a retiring homeowner hoping to sell a larger home to fund their golden years finds fewer, if any, buyers.
It’s a stand-off. Everyone waits for someone else to blink first.
That is not a healthy market. No matter how much your home has appreciated on paper since 2020, if no one can afford to buy it, what’s it really worth to you?
For that matter, what’s a newly-built home worth if no one can afford it?
Builders don’t stop building single-family homes because Americans no longer want them. It’s not a decision made out of sentiment, but rather based on math. Builders pull back when they can’t sell at a profitable price.
Today, homebuilding is being weighed down by higher mortgage rates, rising land and materials costs on top of a glut of unsold new homes.
Now, maybe that sounds contradictory at first.
How can America have a housing shortage and too many unsold new homes?
The answer is affordability.
A home can be needed and still be unaffordable. A family can want to buy and still fail to qualify for a mortgage.
A builder can have unsold homes that aren’t at the price point buyers can manage.
This is especially true for starter homes. As much as many regions may need more modestly priced single-family houses, builders often face land, labor, financing and materials costs that simply make starter-home construction unprofitable. If that’s the case, regardless of need, builders will focus their efforts on something else (apartment buildings or high-end luxury homes, perhaps).
So the housing market ends up with a strange imbalance:
That is one reason single-family permits matter. Permits are a forward-looking signal. When they fall, builders are telling us they see risks ahead.
And let me be clear. Housing is much more than just another sector of the economy.
It is easy to treat housing as something that matters only to people buying or selling a home this year.
That is a mistake.
The National Association of Home Builders estimates that housing’s combined contribution to GDP generally averages 15-18%.
Residential investment alone – including new single-family and multi-family construction, remodeling, manufactured homes and broker fees – averages roughly 3-5% of GDP. Housing services add another 12-13%.
About $1 out of every $6 of national economic activity comes from the housing market. In plain English, housing is a major pillar of the economy, as big as healthcare spending.
That leads me to my next point: When single-family construction slows, it affects more than builders, contractors, lenders, real estate professionals, local governments and suppliers. It also weighs on appliance manufacturers, lumber producers, concrete, roofing, windows, flooring, furniture makers, movers and insurance companies – all of these industries have a heavy exposure to the housing cycle.
Like many things we examine closely in the economy, a house is not just a house. It’s an entire economic ecosystem in miniature.
This is why a slowdown in single-family home construction can affect you even if you have no intention of buying or selling a home anytime soon.
Slowing construction signals strain in affordability. It can slow local economic activity. It can limit workforce mobility.
And for retirees, it can complicate the plan to turn home equity into usable income.
The Federal Reserve’s Financial Accounts show that owners’ equity in household real estate stood at roughly $34.9 trillion in the first quarter of 2026.
That is an enormous amount of wealth! For comparison purposes, retirement savings accounts total approximately $32 trillion.
But again, home equity is different from money in a retirement account. Why?
You cannot take a shingle to the grocery store. You cannot hand the pharmacist one square foot of your living room.
To use your home to fund your retirement, you need liquidity. That may mean selling the home and downsizing, borrowing through a HELOC or using some other arrangement (maybe renting out the basement?)
Each option has tradeoffs.
Selling requires a willing buyer at an acceptable price. Right now, as we’ve seen, neither of these are readily available.
Downsizing requires a smaller home that is actually affordable. Again, not currently available.
Borrowing against the home requires taking on debt, at today’s higher interest rates. For most people I know, debt is the last thing they way to retire with.
And doing nothing means the equity remains theoretical (except for tax and insurance purposes).
Now, don’t get me wrong. This doesn’t make home equity worthless. Far from it.
It means home equity isn’t an ATM. We can’t assume cash will be automatically available at the exact moment and in the exact amount we need.
Downsizing sounds simple in theory.
Sell the larger family home. Buy something smaller. Use the difference to supplement retirement savings.
For some families, that works beautifully.
But it depends on what “smaller” costs.
If starter homes, townhouses and smaller single-family homes remain expensive, the downsizing math gets less attractive.
An older couple may sell a larger home for a good price only to discover that the smaller replacement home costs more than expected. Closing costs, moving costs, property taxes, insurance, repairs and higher mortgage rates can reduce the financial benefit.
Some retirees also want to remain near family, doctors, churches and familiar communities. A lower-priced home two states away does not help if it separates them from the life they built.
That is where the single-family shortage becomes a retirement issue.
The lack of attainable homes does not just hurt first-time buyers.
It can also trap older homeowners in houses that are too large, too expensive to maintain or too difficult to navigate physically.
The house may contain wealth.
But the owner may still feel stuck.
The other route is borrowing.
A homeowner can tap equity through a home equity loan, home equity line of credit or reverse mortgage. These tools may be useful in the right circumstances, but they are not free money.
They are loans.
And in a higher-rate environment, loans are more expensive.
A retiree who refinances or borrows against home equity today may face interest costs far above the mortgage rate originally locked in years ago.
That can eat into the very equity the homeowner hoped to access.
This is especially concerning for retirees on fixed incomes. A higher monthly payment can create pressure quickly. Even a reverse mortgage, which does not require ordinary monthly repayments, comes with fees, interest accumulation and rules that must be understood carefully.
The point is not that borrowing against home equity is always wrong.
The point is that it is not a guaranteed or painless solution.
When people say, “At least I have the house,” they may be right.
But having the house is not the same as having the cash.
This is where the housing story becomes personal.
Retirees who cannot access home equity may have to make uncomfortable choices:
Those are not spreadsheet problems. They are kitchen-table problems.
And they are more common than many people want to admit.
A home can make a household look wealthy from the outside while leaving the owner cash-poor inside.
That is the quiet danger of relying too heavily on one illiquid asset.
It may be worth a great deal. It may also be difficult to use when you need it.
Retirement planning is often discussed in terms of accumulation.
Those are important questions.
But retirement also requires access.
Can you use your savings when you need them? Can you do so without selling into a weak market, borrowing at an unattractive rate or being forced into a rushed decision?
That is where diversification becomes more than a slogan.
A diversified retirement strategy should not depend on one source of wealth – especially not one as large, expensive and illiquid as a home.
Physical precious metals can play a role here for some families. To be clear, gold and silver cannot replace home equity. They do not pay the property-tax bill by themselves, and their prices can fluctuate.
But physical precious metals offer a different set of benefits.
They are tangible. They are not tied to the housing market. They are not dependent on a buyer qualifying for a mortgage. They have historically served as stores of value during periods of inflation and economic stress.
That does not make them a magic answer to the problems in the housing market. It makes them different.
And different matters when the rest of your retirement plan is tied up in one house on one street in one local market, which is why exploring a precious metals IRA can help diversify your savings strategy.
None of this is an argument against homeownership.
Owning a home can be one of the most stabilizing financial decisions a family ever makes. It can provide shelter, dignity, roots and long-term wealth.
But a home should not be asked to do every job.
It is shelter.
It may be a store of wealth.
It may even help fund retirement.
But it is not automatically liquid. It is not immune to local housing conditions. It is not independent of mortgage rates, buyer demand or construction trends.
The latest single-family housing data are a reminder that America’s housing system is under strain.
Builders are cautious. Buyers are stretched. Homeowners are locked into old rates. Starter homes remain scarce. And many retirees are counting on home equity that may be harder to access than they expect.
That does not mean panic is warranted.
It means planning is.
If your retirement plan depends heavily on home equity, now is the time to ask what happens if that equity is not available quickly, cleanly or at the price you hoped.
Diversifying with physical precious metals is one way some families seek to reduce their dependence on the housing market and the broader debt-based financial system.
The dollar buys less today than it did a year ago, a decade ago, a generation ago. That slide is the predictable result of endless printing and borrowing. Dr. Ron Paul believes the FED has the answer. But they’re keeping it to themselves. Fortunately, a new financial chart has publicly exposed their secret moves. See it for yourself: https://freekit.birchgold.com/lf/ro...D_v02a_article&placement=article&cid=rp_media
To learn more about how physical gold could help protect your retirement portfolio, click here to get your FREE info kit on Gold IRAs from Birch Gold Group. And now introducing a Crypto IRA to capitalize on the fastest growing market in the world.
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Continue reading...
[ H/T The Burning Platform ]
For many American families, the largest financial asset they own isn’t sitting in a retirement account.
It has a roof, a water heater, a property-tax bill (and at least one closet nobody wants to clean out).
It is the family home.
For good reason! Homeownership has helped millions of Americans build wealth over time. A paid-off home can provide stability in retirement. Home equity can become a source of financial flexibility when expenses rise or life changes.
But there is a catch we do not discuss often enough: Home equity is not cash. It is wealth locked inside the walls.
To access home equity, a homeowner usually has to sell the house, borrow against it with a home equity line-of-credit (HELOC) or otherwise transform that equity into spending money. And access to that equity is not guaranteed. Each of those options depends on economic conditions outside our control.
If you’re a regular reader, you already know I pay a lot of attention to both of America’s two favorite assets. That includes regular check-ins on the state of the housing market.
This is why the latest single-family housing numbers caught my attention. I think they’re worth your attention as well, especially if you’re nearing retirement and expecting home equity to help fund the next stage of your life…
Single-family homebuilding is slowing
Reuters reported that U.S. single-family homebuilding fell for a third straight month in June, while permits for future single-family home construction dropped to their lowest level in 10 months (via Yahoo Finance).
The Census Bureau’s June construction report shows the same split:
- Overall housing starts rose 19% in June (but that headline was driven largely by multi-family projects)
- Single-family starts slipped to an annual rate of 895,000 (seasonally adjusted)
- Single-family permits fell 2.4% to a rate of 871,000.
Here’s why I’m drawing a line between multi-family and single-family homes: An apartment building and a starter home do not serve the same purpose in the housing market. “Multi-family” projects are almost exclusively apartment buildings and condominiums.
That’s not to say multi-family housing construction is inherently bad. A new apartment building may give renters more options, maybe even lower payments. That can be helpful, especially in areas where housing costs have become painful.
But a single-family starter home plays a different role. It’s the first rung on the homeownership ladder. When a younger family buys one, that may eventually free up another rental. Then, later, when that family moves to a larger home, the starter becomes available for someone else.
That normal turnover keeps the housing market active and flexible.
This means, when single-family construction slows, the ladder gets harder for new families to climb.
And when the ladder gets harder, everyone feels it eventually – even those of us who thought our homes would be easy to sell when it’s time for retirement.
The rate-lock effect is still distorting the housing market
The housing market is dealing with two major challenges right now.
The first is affordability. This is pretty straight-forward: The majority of American families cannot afford a median-priced home. You can argue that families aren’t making enough money, or that home prices have risen too far, too fast.
Either way, the result: Homes are less affordable today than at the peak of the mid-2000s housing bubble.
The Case-Shiller National Home Price Index is up over 50% since 2020. In other words, home prices remain out of reach in many parts of the country.
Second, mortgage rates are much higher today than the ultra-low rates many of us locked in several years ago.
The 30-year fixed mortgage rate averaged an 11-month high of 6.55% this month, according to Freddie Mac.
That is not just a buyer problem.
It is also a seller problem.
A homeowner with a 3% mortgage may want to move, but moving could mean giving up that old rate and replacing it with a new loan at roughly double the interest cost.
That is the rate-lock effect.
Yahoo Finance described the same dynamic earlier this year. The basic idea is simple. Many homeowners are staying put not because their current home is perfect, but because their current mortgage is too good to give up. We’re talking about a 25-30% increase in monthly mortgage payments due to higher rates alone.
That obviously reduces turnover in the housing market. A family that might have moved from a starter home to a three-bedroom, two-bathroom family home stays put instead. Their starter home never reaches the market. That means a first-time buyer keeps renting. And it also means a retiring homeowner hoping to sell a larger home to fund their golden years finds fewer, if any, buyers.
It’s a stand-off. Everyone waits for someone else to blink first.
That is not a healthy market. No matter how much your home has appreciated on paper since 2020, if no one can afford to buy it, what’s it really worth to you?
For that matter, what’s a newly-built home worth if no one can afford it?
Why homebuilders are pulling back
Builders don’t stop building single-family homes because Americans no longer want them. It’s not a decision made out of sentiment, but rather based on math. Builders pull back when they can’t sell at a profitable price.
Today, homebuilding is being weighed down by higher mortgage rates, rising land and materials costs on top of a glut of unsold new homes.
Now, maybe that sounds contradictory at first.
How can America have a housing shortage and too many unsold new homes?
The answer is affordability.
A home can be needed and still be unaffordable. A family can want to buy and still fail to qualify for a mortgage.
A builder can have unsold homes that aren’t at the price point buyers can manage.
This is especially true for starter homes. As much as many regions may need more modestly priced single-family houses, builders often face land, labor, financing and materials costs that simply make starter-home construction unprofitable. If that’s the case, regardless of need, builders will focus their efforts on something else (apartment buildings or high-end luxury homes, perhaps).
So the housing market ends up with a strange imbalance:
- Not enough affordable new homes
- Too many new and old homes that are out of reach
That is one reason single-family permits matter. Permits are a forward-looking signal. When they fall, builders are telling us they see risks ahead.
And let me be clear. Housing is much more than just another sector of the economy.
The role housing plays in the U.S. economy
It is easy to treat housing as something that matters only to people buying or selling a home this year.
That is a mistake.
The National Association of Home Builders estimates that housing’s combined contribution to GDP generally averages 15-18%.
Residential investment alone – including new single-family and multi-family construction, remodeling, manufactured homes and broker fees – averages roughly 3-5% of GDP. Housing services add another 12-13%.
About $1 out of every $6 of national economic activity comes from the housing market. In plain English, housing is a major pillar of the economy, as big as healthcare spending.
That leads me to my next point: When single-family construction slows, it affects more than builders, contractors, lenders, real estate professionals, local governments and suppliers. It also weighs on appliance manufacturers, lumber producers, concrete, roofing, windows, flooring, furniture makers, movers and insurance companies – all of these industries have a heavy exposure to the housing cycle.
Like many things we examine closely in the economy, a house is not just a house. It’s an entire economic ecosystem in miniature.
This is why a slowdown in single-family home construction can affect you even if you have no intention of buying or selling a home anytime soon.
Slowing construction signals strain in affordability. It can slow local economic activity. It can limit workforce mobility.
And for retirees, it can complicate the plan to turn home equity into usable income.
Your home is a retirement asset – but it’s not a simple one
The Federal Reserve’s Financial Accounts show that owners’ equity in household real estate stood at roughly $34.9 trillion in the first quarter of 2026.
That is an enormous amount of wealth! For comparison purposes, retirement savings accounts total approximately $32 trillion.
But again, home equity is different from money in a retirement account. Why?
You cannot take a shingle to the grocery store. You cannot hand the pharmacist one square foot of your living room.
To use your home to fund your retirement, you need liquidity. That may mean selling the home and downsizing, borrowing through a HELOC or using some other arrangement (maybe renting out the basement?)
Each option has tradeoffs.
Selling requires a willing buyer at an acceptable price. Right now, as we’ve seen, neither of these are readily available.
Downsizing requires a smaller home that is actually affordable. Again, not currently available.
Borrowing against the home requires taking on debt, at today’s higher interest rates. For most people I know, debt is the last thing they way to retire with.
And doing nothing means the equity remains theoretical (except for tax and insurance purposes).
Now, don’t get me wrong. This doesn’t make home equity worthless. Far from it.
It means home equity isn’t an ATM. We can’t assume cash will be automatically available at the exact moment and in the exact amount we need.
Downsizing is harder when every rung is expensive
Downsizing sounds simple in theory.
Sell the larger family home. Buy something smaller. Use the difference to supplement retirement savings.
For some families, that works beautifully.
But it depends on what “smaller” costs.
If starter homes, townhouses and smaller single-family homes remain expensive, the downsizing math gets less attractive.
An older couple may sell a larger home for a good price only to discover that the smaller replacement home costs more than expected. Closing costs, moving costs, property taxes, insurance, repairs and higher mortgage rates can reduce the financial benefit.
Some retirees also want to remain near family, doctors, churches and familiar communities. A lower-priced home two states away does not help if it separates them from the life they built.
That is where the single-family shortage becomes a retirement issue.
The lack of attainable homes does not just hurt first-time buyers.
It can also trap older homeowners in houses that are too large, too expensive to maintain or too difficult to navigate physically.
The house may contain wealth.
But the owner may still feel stuck.
Borrowing against the home has become more expensive
The other route is borrowing.
A homeowner can tap equity through a home equity loan, home equity line of credit or reverse mortgage. These tools may be useful in the right circumstances, but they are not free money.
They are loans.
And in a higher-rate environment, loans are more expensive.
A retiree who refinances or borrows against home equity today may face interest costs far above the mortgage rate originally locked in years ago.
That can eat into the very equity the homeowner hoped to access.
This is especially concerning for retirees on fixed incomes. A higher monthly payment can create pressure quickly. Even a reverse mortgage, which does not require ordinary monthly repayments, comes with fees, interest accumulation and rules that must be understood carefully.
The point is not that borrowing against home equity is always wrong.
The point is that it is not a guaranteed or painless solution.
When people say, “At least I have the house,” they may be right.
But having the house is not the same as having the cash.
The hard choices come later
This is where the housing story becomes personal.
Retirees who cannot access home equity may have to make uncomfortable choices:
- Delay medical care
- Skip dental work
- Cut back on groceries
- Let repairs wait too long
- Move farther from family
- Lean on adult children (who may already be stretched thin)
Those are not spreadsheet problems. They are kitchen-table problems.
And they are more common than many people want to admit.
A home can make a household look wealthy from the outside while leaving the owner cash-poor inside.
That is the quiet danger of relying too heavily on one illiquid asset.
It may be worth a great deal. It may also be difficult to use when you need it.
Diversification should include liquidity
Retirement planning is often discussed in terms of accumulation.
- How much did you save?
- How much did your accounts grow?
- How much is the house worth?
Those are important questions.
But retirement also requires access.
Can you use your savings when you need them? Can you do so without selling into a weak market, borrowing at an unattractive rate or being forced into a rushed decision?
That is where diversification becomes more than a slogan.
A diversified retirement strategy should not depend on one source of wealth – especially not one as large, expensive and illiquid as a home.
Physical precious metals can play a role here for some families. To be clear, gold and silver cannot replace home equity. They do not pay the property-tax bill by themselves, and their prices can fluctuate.
But physical precious metals offer a different set of benefits.
They are tangible. They are not tied to the housing market. They are not dependent on a buyer qualifying for a mortgage. They have historically served as stores of value during periods of inflation and economic stress.
That does not make them a magic answer to the problems in the housing market. It makes them different.
And different matters when the rest of your retirement plan is tied up in one house on one street in one local market, which is why exploring a precious metals IRA can help diversify your savings strategy.
Your home can be part of the plan – not the whole plan
None of this is an argument against homeownership.
Owning a home can be one of the most stabilizing financial decisions a family ever makes. It can provide shelter, dignity, roots and long-term wealth.
But a home should not be asked to do every job.
It is shelter.
It may be a store of wealth.
It may even help fund retirement.
But it is not automatically liquid. It is not immune to local housing conditions. It is not independent of mortgage rates, buyer demand or construction trends.
The latest single-family housing data are a reminder that America’s housing system is under strain.
Builders are cautious. Buyers are stretched. Homeowners are locked into old rates. Starter homes remain scarce. And many retirees are counting on home equity that may be harder to access than they expect.
That does not mean panic is warranted.
It means planning is.
If your retirement plan depends heavily on home equity, now is the time to ask what happens if that equity is not available quickly, cleanly or at the price you hoped.
Diversifying with physical precious metals is one way some families seek to reduce their dependence on the housing market and the broader debt-based financial system.
The dollar buys less today than it did a year ago, a decade ago, a generation ago. That slide is the predictable result of endless printing and borrowing. Dr. Ron Paul believes the FED has the answer. But they’re keeping it to themselves. Fortunately, a new financial chart has publicly exposed their secret moves. See it for yourself: https://freekit.birchgold.com/lf/ro...D_v02a_article&placement=article&cid=rp_media
To learn more about how physical gold could help protect your retirement portfolio, click here to get your FREE info kit on Gold IRAs from Birch Gold Group. And now introducing a Crypto IRA to capitalize on the fastest growing market in the world.
Tweet
Continue reading...
[ H/T The Burning Platform ]
