How To Work With Financial Advisers To Help Clients Navigate The Market


Real estate professionals and financial advisers can help individuals make informed decisions, writes investment expert Michael Conticelli, whether buying a home, pursuing alternative investments or building a real estate portfolio.

This January marks Inman’s fifth annual Agent Appreciation Month, which culminates at Inman Connect New York in a celebration of agents at the end of January. Plus, we’re rolling out the coveted Inman Power Player Awards, as well as the New York Power Brokers and MLS Innovators awards.

The current housing market is experiencing unprecedented challenges, with mortgage rates reaching 8 percent and soaring home prices making it increasingly difficult for new buyers to enter. Despite these obstacles, many prospective homeowners are still determined to invest in property, viewing it as a means to secure their financial future.

While we can debate whether or not a home purchase is an investment, for many families, it is a significant asset that deserves just consideration. In this article, we will explore the significant affordability issues in today’s housing market and discuss how financial advisors and real estate agents working together can play a crucial role in helping individuals navigate these challenges. 

The affordability crisis

The most recent analysis by Zillow reveals the severity of the housing affordability crisis. Zillow’s Breakeven Horizon is a gauge that offers an answer to the question prospective new homebuyers always face: At what point does it become financially advantageous to buy rather than rent?

New homebuyers may need to spend approximately 13.5 years in their homes before breaking even on their investments. Traditionally, homeowners would reach this breakeven point within four to six years.

The time it takes to make a profit on the sale of a home purchased today would be even longer, potentially locking homeowners in place to avoid a loss. This prolonged timeline is a cause for concern for many individuals seeking to build equity and achieve financial stability through homeownership.

It could also significantly impact other financial decisions, such as relocating to pursue a better job or retirement, if your plan isn’t to stay in place. 

Factors affecting the breakeven duration

Several factors influence how long it takes for homeowners to break even on their properties. These factors include mortgage rates, down payment amounts, closing costs, insurance, property taxes, and the annual appreciation rate.

Location also plays a significant role, with high-value metro areas experiencing considerably shorter breakeven periods due to consistent growth. In contrast, more “affordable” markets with slower growth rates may require over 20 years to reach the breakeven point.

The role of financial advisers

In such a challenging housing market, the expertise of financial advisers becomes invaluable. Here’s how they can help:

  1. Financial planning: Financial advisers can assess an individual’s financial situation and long-term goals to determine whether homeownership is viable. They can help clients set realistic expectations and develop a comprehensive financial plan. 
  2. Mortgage strategy: Advisers can guide clients in selecting the right mortgage options,  including fixed-rate or adjustable-rate mortgages, and help them navigate the complexities of interest rates, down payments, and closing costs. 
  3. Investment diversification: In some cases, it may be more financially sound to continue renting and invest the savings in other assets for future growth. Financial advisers can provide insights into diversifying investments to build wealth and achieve financial goals. 
  4. Tax efficiency: Advisers can assist homeowners in optimizing their tax strategies, ensuring they make the most of available deductions and credits. 
  5. Property selection: Financial advisers can help clients identify properties in areas with more favorable growth rates, reducing the time needed to reach the breakeven point. An adviser can also illustrate the long-term impact of choosing a more or less expensive home. 

Expanding services for real estate agents

Real estate agents can also seize an opportunity amid the challenges of the current housing market by expanding their services. Many individuals seek guidance in purchasing homes, making sound investment decisions, and how purchasing will affect their financial strategy. With their deep housing market knowledge, real estate agents can consider becoming Investment Advisor Representatives.

Editor’s note: Always check with your supervising broker and local regulatory boards to determine whether gaining or exercising a dual license of any kind could create a conflict of interest for consumers or within your state or association.

By offering investment advisory services, they can help clients find the right properties and devise comprehensive investment strategies. This expansion in services allows real estate agents to provide clients with a holistic approach to wealth building, capitalizing on their expertise to navigate the complex world of real estate. In doing so, they strengthen client relationships and adapt to the market’s changing demands. 

In these uncertain times, the partnership between prospective homeowners, financial advisers, and real estate agents is essential to achieving long-term financial stability and success in the real estate market.

Together, they can help individuals make informed decisions, whether buying a home, pursuing alternative investments, or building a real estate portfolio. By offering comprehensive services and expert guidance, they play a vital role in helping clients navigate the challenges of the current housing market and work towards their financial goals.

Michael Conticelli, CFS, CDFA, is an Investment Advisor Representative (IAR) and  Advisor Development with Interactive Financial Advisors, Inc., an SEC Registered Investment Advisor. Connect with Michael on Linkedin.


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