House == bank ???

[Carol1862]

200K difference on a 3.1M portfolio is nothing more than a market fluctuation in magnitude.

After years of hard work and saving, go ahead and buy the nicer house if that's what you want.

I agree. You earned the luxury of being able to enjoy the larger home. Go for it!

 

[l8_apex]

I agree. You earned the luxury of being able to enjoy the larger home. Go for it!

I'm piling on here. Just get the nicer house. Your finances can easily accommodate it.

My only concern would be whether you and your family will have any issue with lifestyle creep. If that's not an issue, then you'll be fine.

As others have suggested, you should think about your AA and whether you're being too conservative.

 

[kgtest]

I think that the essence of the OP's question is that if he put an extra $200k into housing is that like money in the bank. In terms of guarantees, certainly not... there is a remote possibility that the value of the house would decline and when he sells that he will not get his $200k back. In terms of what will likely happen... then maybe... the most likely result is that when he sells many years later that he will get his $200k back plus some modest appreciation.. but it is not guaranteed like a bank. He has enough so it would be a prudent risk to take IMO... but if it were me I would leave the $200k invested and take out a mortgage to finance the difference.

Case in point. Bought my home and PO paid 50k more for the home then they sold it to me for, ten years later.

They lost 1% annually, and sold to me to be in a more expensive lake home. Plus new furnace, roof, four remodeled bathrooms and a kitchen. They did some outside concrete and landscape work as well. I guess they had dough to blow.


To this day I am somewhat confused as to why they would do this? I know their kid was big into wake boarding and the lake allowed him to pursue that passion.

 

[sheehs1]

A little late to this thread...

Last year I spent about 15% of my liquid investments/9% of my total net worth on a second home that is a bay front condo. Why? (1) i had been looking forever for something that felt right that had the stellar views and was affordable (2) I loved it and it was a quality of life decision (3) I had a lot of cash sitting around doing nothing (4) My home that I also have of over 25 years is in a location where a major international company pulled and many amenities that were here are no longer here - but I love my house and am not ready to sell it (5) With the market highs and with cash sitting around, interest rates low, I felt it was a way to divert some $$, keep it out of the stock market, etc. I don't consider it "money in the bank" but it is "an asset"...sort of ..although I define an asset as something that makes you money not one you spend money on. A core of this asset will be preserved ...unless sea levels rise and take out the second floor, unless a hurricane slams it but I have flood insurance, unless, unless, unless. I am at the age I don't care nor do I worry about things like that anymore. There will always be reasons to keep you from doing something.

8 months later and I have never had one ounce of regret or buyers remorse. Bay front views as soon as I walk in the door. Best thing I have done in quite a while. Based on what you have written, I'd say...do what inspires you and your wife and what your hearts and gut instincts tell you. From the numbers you seemingly can afford it.

 

[Cayman]

[QUOTE: My question is: should I consider the extra $200K to be like money in the bank? If I need it back, can I just downsize later, and enjoy the better house for the next 10-15 years? [/QUOTE]

1. OR you could spend $200k less and move UP to the larger home in 10-15 years if circumstances allow and you want to. (the opposite of what you propose above)

2. Home values have fluctuated wildly in W. Palm over the years, so no.... stable value isn't assured and you may sit for years with a for sale sign and then sell at a substantial loss.

3. West Palm real estate has a median selling price of ~$250k.There are many desirable $350k homes in the West Palm area that do not look at walls. Many.

Your stash, the economy and your spending may easily support $550k+ on a home purchase. If you're truly concerned, just spend less/sleep more. Only you can decide.

 

[Scuba]

YMMV, but DH and I bought an oceanfront condo in So CA in 2003. The views still amaze us 15 years later. Sure, we could have bought a similar sized condo just a few blocks inland for less than half the price and looked at the buildings next door and across the street instead of having an unobstructed view of sand and ocean. But we’re glad we went for it.

When real estate markets crash as they inevitably do, well-located property usually doesn’t go down as much and rises faster after the bottom.