We have calculated our net worth as all our money and stocks, after downsizing to a smaller house, which will leave us 50% of the price of our current house. But I do calculate that we then will be living in a cheaper house without any mortgage.
The first year of FIRE (hopefully starting this year) will be a bit different, because we want to rent somewhere first. But we will put the money for the future house somewhere safe, maybe on bank accounts.