If You Can't Afford A House, You Can't Afford A House: Here's What To Do Instead.

There is another version of this blog I could have written today…

It is the one where I tell you that rates hitting 7.28% is actually fine, that the competition is thin, and that you should go buy a house immediately, like yesterday but if not yesterday – today is the best choice. I have made versions of that argument all year and I stand behind them. But I also know that argument starts to sound tone deaf at a certain point, and I think we just might be at that point.

What do you think?  Consider this before you answer…

If you cannot afford the payment at 7.28%, you cannot afford the house. Full stop. No amount of reframing changes how that feels for people. 

Something is going to shift over the next twelve months. The war ends, or inflation breaks, or spreads compress, or Warsh keeps his nerve and the bond market finally believes him. I do not know which one and I do not know when. What I do know is that when it happens, there will be a window, and it will not stay open long, because every buyer who has been sitting out will come back at the same time.

The people who can jump fastest at that window are the people who are financially fit when it opens.

Not the people who waited for it in order to start getting ready to buy. The people who were ready for it and sprint. So today is not about whether you should buy a house. Today is about making sure you (or your clients) are in a position to make that call on your own terms when the math finally works.

Here is where things actually stand this week.

Mortgage rates hit 7.28% Thursday, up from 7.03% the week before. Sixth consecutive weekly increase and the biggest one week jump since October 2022. Consumer confidence fell to 81.9, a twelve year low, and the expectations index dropped to 63.6. Any reading under 80 has historically preceded a recession within a year. Average twelve month inflation expectations are running at 6.1%.

And then this morning…

The September jobs report came in at 29,000. Economists were looking for 84,000. The unemployment rate rose to 4.2% from 4.1%. And the revisions were worse than the headline. August got marked down from 162,000 to 133,000, and July flipped from a small gain to an outright loss of 10,000. In total, 60,000 fewer jobs than we thought existed a month ago.  This is the age old, incredibility irritating component to the jobs report.  It’s fake until it’s revised but the market reacts to the fake headline number only.

One piece of nuance worth holding onto. The jump in unemployment was driven partly by people re-entering the labor force, which is a healthier reason for that number to rise than mass layoffs. The household survey looked meaningfully better than the payroll survey.

But the trend is the trend. The BLS noted that September's gain came in against an average monthly gain of just 33,000 over the prior 12 months. So a weak month, in an already weak year. Meaning - we are, at the moment, treading water.

Markets actually rallied on the news, because a weak labor market makes it harder for the Fed to hike again on October 28th. So the same report that should make you take your job security seriously is also the first real argument for rate relief we have had in six weeks.

Both things are true. This is why we need to talk about protecting your personal economy.

Six Things That Protect You Regardless of What Happens Next

One. Find out what you actually spend.

Not what you think you spend. What you actually spend. Pull ninety days of bank and card statements and add it up by category.

Almost everyone I do this exercise with finds somewhere between four and eight hundred dollars a month they did not know about. Subscriptions, convenience spending, the slow creep of everything costing more while the budget in your head stayed the same.

Two. Build the gap before you need it.

The standard advice is three to six months of expenses in cash. With hiring this slow, I would lean toward six.

I’m not saying you are going to lose your job. It’s just the cost of being unprepared for that that is enormous.

Three. Kill the variable rate debt first.

Credit card APRs are sitting above 21%. That is the most expensive money in your life by a wide margin, and unlike your mortgage it reprices against you every time the Fed moves.

If you are carrying a balance and you also own a home with equity, run the numbers on consolidating it. I am not going to tell you that is right for everyone. Turning unsecured debt into debt secured by your house is a real decision with real implications. But a lot of people are paying 21% when they could be paying significantly less, and nobody has ever walked them through it.

Four. Do not raid your 401k.

I see this every single year and it breaks my heart every single time. Someone pulls money out of retirement to cover a gap, or even for a down payment, and nobody tells them that withdrawal becomes taxable income. Then it wrecks their tax refund, maybe even turns into a tax liability owed.

Sometimes it makes sense to withdraw.  Sometimes it would be better to just take a loan against your 401k. Ask before you do it, not after.

Five. Protect your credit score like it is an asset. Because it is.

Your score is the single biggest lever on what you pay for everything. The difference between a 680 and a 760 on a mortgage is real money every month for thirty years. Same on your car. Same on your cards.

Monitor your report. Check it for errors. Keep your utilization as low as you can. Also, do not close old accounts because the age of your credit history matters.

This is the cheapest financial improvement available to most people.

Six. Audit your fixed costs now, while nothing is wrong.

Insurance, phone, internet, subscriptions, anything on autopay. Every one of those is negotiable or replaceable, and all of them are easier to deal with when you are not panicking.

Do it this month. It is boring. And, it works.

If You Are a Seller Right Now

The rate jump this week made your job harder and I am not going to pretend otherwise. Mortgage applications fell 6% last week, the fourth consecutive weekly decline. Your buyer pool shrank again.

Here is the reframe I want you to sit with, because I think most sellers and a lot of agents are still pricing the wrong number. Stop thinking about your list price. Start thinking about the monthly payment required to live in your house.

At 7.28% with 10% down on a $430,000 home, your buyer is looking at roughly $2,650 in principal and interest. Add taxes, insurance, and PMI and they are realistically somewhere around $3,300 a month.

Now ask yourself the question almost nobody asks. Who is the actual buyer for my house? What do they do for a living? What do they earn? Can that person comfortably carry $3,300 a month?

If the answer is no, you have two choices. You can cut your price and screw your net proceeds. Or you can change the math. A seller concession structured as a rate buydown moves that payment in a way a price cut cannot touch. Fifteen thousand dollars off your price saves your buyer roughly $100 a month. That same fifteen thousand applied as a 2-1 buydown can take five hundred a month off their payment in year one. Same money out of your pocket. Completely different effect on whether they can qualify and whether they say yes.

HERE’S THE KEY WITH A SELLER BUY DOWN. (Because I know my realtors are listening and saying, I already tried that and didn’t get any more activity.)

Once you know that number, you know how to market the house. You are no longer listing a property and waiting. You are telling a specific buyer that the payment they assumed was out of reach is not.  You have to market to them specifically and creatively.  Not just a remark in the MLS comments.

Two other things. Get the pre listing inspection done, because in a market where buyers have leverage, surprises in escrow are how deals die. And know that you are competing with builders who have margin room you do not have. If there is new construction near you, that is your real competition, not the house down the street.

If You Are a Buyer Right Now

The math is worse than it was a month ago. That is just true.

But the strategy has not changed, and I have written about most of it already this year. Rather than repeat myself, here is where to go.

Go read the three tactics that work in a 7% market for the full breakdown on builder concessions, including why builders are the most motivated sellers right now and what they can structure that an individual seller cannot. 

Understand why aged listings are your best negotiating opportunity for how to work with your agent to pull expired and stale inventory, and why a seller sitting since August is a completely different negotiating partner than one who listed last week. 

And check out what has to happen before rates come down if you want the honest version of the forecast, including the two dates between now and the end of 2027 that actually matter. 

One new thing worth knowing this week. ARM loans are currently running about 80 basis points below fixed and made up 10.3% of applications last week, the highest share since October 2025. I don’t know if an ARM is right for you.  I will tell you I would personally use an ARM right now. It is a conversation worth having if you have a defined time horizon for this loan or property.

If You Are Worried About Your Job

You know better than I do if layoffs are coming for your industry or company. There is very little slack in this labor market though. If something does happen, replacing that income will likely take longer than it would have a year ago. Plan for the timeline, not the catastrophe because I’m not trying to give anyone anxiety today.

Just do these things now, while you are still employed.

Update your resume this month. 

Have three conversations with people in your industry over the next ninety days. Not asking for anything. Just staying visible. Almost every job that gets filled quickly gets filled through a relationship that already existed.

Know your runway (we talked about this already). Take your real monthly number, divide your cash reserves by it, and know how many months you have. That number changes how you make every other decision and most people have never calculated it.

And then do the thing that actually matters most.

Invest in yourself.

Become the hardest person on your team to replace. Learn the thing nobody else wants to learn.  Do not be the person who looks asleep at their desk every time your boss comes by. Take on the project everyone is avoiding. The people who survive restructurings are almost never the ones who kept their heads down. They are the ones whose absence would create an obvious or loud problem.

Then build a second thing. Learn a skill that could generate income independently, even if it is small. A side income is an insurance policy you don’t have to buy, and it completely changes how it feels to go to work every day. When your paycheck is not your only option, you negotiate differently. You take smarter risks. You stop making decisions out from a scarcity mindset.

That is what financial fitness actually looks like. 

And if you are thinking about buying a house while you are worried about your job, talk to me before you do anything. Sometimes the answer is still yes. Sometimes it will be to wait six or 12 months. Either way you deserve someone running real numbers with you instead of guessing.

If You Work in This Industry

Let me talk to the agents and loan officers for a minute. This market is thinning the field. Transaction volume is down, rates just hit a three year high, and a lot of people who got into this business in 2020 and 2021 have never worked a market like this one.

Some of them are going to leave. Some of them should.  You can always count on me to say out loud what everyone is thinking.

Some of them are sitting there right now wondering if they are failing, when what is actually happening is that they are working the hardest market in fifteen years without anybody having taught them how.

That is why I am bringing back my Mind over Markets Bootcamp.

It is built for agents who are at that exact crossroads. Is this career actually for me? And if it is, how do I make it stick? How do I use a market this hard as the thing that separates me from everyone who quits?

I will be opening the waitlist in November. If that sounds like you, or like someone on your team, keep an eye out. The agents who learn to operate in this market are going to own the next one. That is not a motivational line. That is just what happens every single cycle, and I’ve lived through a few.

The Part I Actually Want You to Hear

The talk about the next six to twelve months being rough is not hysteria. The data supports it. Consumer confidence at a twelve year low, an expectations reading under 80, and job growth sitting right at breakeven are not numbers you can wave away.

But a hard economy does not have to equate to a hard life. The people who come through these periods in the best shape are the ones who were boring on purpose. Who had the cash. Who killed the expensive debt. Who protected their credit. Who knew their number.

You cannot control the bond market. You can control whether you are the person watching it with options.

That is the whole game.