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View Poll Results: My home represents this percentage of the total computed in Step 1 (in the first post
0-10% 92 26.44%
10-20% 132 37.93%
20-30% 65 18.68%
30-40% 24 6.90%
40-50% 18 5.17%
>50% 7 2.01%
I rent or do not have a main home 10 2.87%
These poll choices are terrible! None fit me, but I wanted to participate. 0 0%
Voters: 348. You may not vote on this poll

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Old 09-22-2016, 06:26 PM   #121
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Some of these percentages are very high, which means the hard asset component of that asset distribution is kind of locked into that high spot. Not that that's 'bad', just that I wonder if there are folks in that position that are ignoring their personal residence when it comes to setting and maintaining their asset allocation. Of course if you wanted to "rebalance" out of hard asset towards, say, equities, you could always take out a loan and buy stock.
I can only speak for myself.... But my retirement plan did not include "spending" my house or using my house for anything but shelter. Since it's paid off - the expense is just the normal expenses of owning a home - maintenance, upgrades, taxes, insurance.... Those are the same among similar size houses whether the house is in a high COLA or low COLA.

My retirement plan did include rental income from our granny flat... but that income and the value the granny flat adds to our house is specifically excluded in this poll.

As for asset allocation concerns... I don't own any REITs so the primary and granny flat kind of skew the asset allocation towards that... but I don't worry about that. I don't include the house in the withdrawal rate. My investible assets have a mix of equities and bonds and cash in roughly 60% equities, 40% bonds&cash.

All that said - owning an expensive house outright gives me a robust "Plan B" option if the market tanks, one or both of us ends up in extended long term care, or some other catastrophic event. It gives me confidence to forgo the LTC insurance.
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Old 09-22-2016, 06:47 PM   #122
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Great poll, I'm at about 7-8% with a paid for home. Not being house poor sure makes it easy to stack those Benjamin's. 😎
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Old 09-22-2016, 08:33 PM   #123
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Was at 29% until we sold our condo in the Boston area in August when I FIRE'd. Now at 13% based on the home we just bought "back home" in a slightly less HCOL area still on the east coast.
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Old 09-22-2016, 09:28 PM   #124
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Ours is 6% but I don't count it in the bucket of investable assets.
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Old 09-22-2016, 09:51 PM   #125
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Some of these percentages are very high, which means the hard asset component of that asset distribution is kind of locked into that high spot. Not that that's 'bad', just that I wonder if there are folks in that position that are ignoring their personal residence when it comes to setting and maintaining their asset allocation. Of course if you wanted to "rebalance" out of hard asset towards, say, equities, you could always take out a loan and buy stock.
I was thinking about this today. If I had cash equal to my total assets to allocate today, would I really choose to invest 24% of it in residential real estate? Probably not. But there you have it.
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Old 09-22-2016, 10:32 PM   #126
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If you have it w/o having to buy it even better. Always an asset if times get tough.
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Old 09-22-2016, 10:44 PM   #127
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I was thinking about this today. If I had cash equal to my total assets to allocate today, would I really choose to invest 24% of it in residential real estate? Probably not. But there you have it.
I see this point. But people choose where they live for a variety of reasons... family, employment, etc. I moved back to San Diego 15 years ago... and was in total sticker shock on the price of homes compared to the Philly burbs where we were coming from. But my family was here, and I had a job that allowed us to afford a house here.

Once we paid off the house (12 years after we purchased), it became a non-issue.

I think the market value of my house is obscene... it's a 50 year old tract home worth a HUGE amount of money. But it was cheaper when we bought... and it's a comfortable, paid for, house to live in.
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Old 09-22-2016, 11:49 PM   #128
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20% of our NW is equity in our primary home, I hope I understood the question correctly. San Diego is expensive.
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Old 09-22-2016, 11:54 PM   #129
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I see this point. But people choose where they live for a variety of reasons... family, employment, etc. I moved back to San Diego 15 years ago... and was in total sticker shock on the price of homes compared to the Philly burbs where we were coming from. But my family was here, and I had a job that allowed us to afford a house here.

Once we paid off the house (12 years after we purchased), it became a non-issue.

I think the market value of my house is obscene... it's a 50 year old tract home worth a HUGE amount of money. But it was cheaper when we bought... and it's a comfortable, paid for, house to live in.
It's not just about numbers, I love my San Diego home! We back up on a championship golf course and have horse trails running along side all our sidewalks. Every morning I go for a 20 minute walk past the vineyard and the co-op farm. It's amazing. It's a little more money tied up in real estate than we had to do, but it's worth it today. It can't always be about the math, eh?
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Old 09-23-2016, 01:50 AM   #130
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I can only speak for myself.... But my retirement plan did not include "spending" my house or using my house for anything but shelter. Since it's paid off - the expense is just the normal expenses of owning a home - maintenance, upgrades, taxes, insurance.... Those are the same among similar size houses whether the house is in a high COLA or low COLA.
All that said - owning an expensive house outright gives me a robust "Plan B" option if the market tanks, one or both of us ends up in extended long term care, or some other catastrophic event. It gives me confidence to forgo the LTC insurance.
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Old 09-23-2016, 03:00 AM   #131
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I was thinking about this today. If I had cash equal to my total assets to allocate today, would I really choose to invest 24% of it in residential real estate? Probably not. But there you have it.
We sold our house in readiness for a retirement full of travel and since doing so, moving into an apartment in the same city we then moved moved cities 3 more times before retiring and then for the past 7 years have spent 5-7 months away and the lock and leave ability has been great.

We have now decided to settle in one place, in Yorkshire, and within the next 12 months we'll be buying a house for cash using some of our investable assets and that will set our ratio in this poll at ~15%. (We'll also vacate our apartment in Texas).
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Old 09-23-2016, 08:10 AM   #132
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See the table in this article that shows median net worth by age, with and without home equity included. Data is from US Census Bureau and it makes me wonder how so many can survive a long life or retirement with these numbers:
Americans' Average Net Worth by Age -- How Do You Compare? -- The Motley Fool

It would be interesting to see the numbers of people that make up each data age group. I can only assume that many people are planning to rely on SS and/or a pension to survive.
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Old 09-23-2016, 08:27 AM   #133
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I was thinking about this today. If I had cash equal to my total assets to allocate today, would I really choose to invest 24% of it in residential real estate? Probably not. But there you have it.
This is a good question and one that I faced twice when we decided to buy our vacation properties. The second one (Arizona) was the most expensive and took our ratio up to about 20%. I thought long and hard about this before proceeding. So, I can conclude that 20% is the upper bound for me. Personal decision for sure but you really have to love your real estate for a ratio over 30% in my view.
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Old 09-23-2016, 09:12 AM   #134
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See the table in this article that shows median net worth by age, with and without home equity included. Data is from US Census Bureau and it makes me wonder how so many can survive a long life or retirement with these numbers:
Americans' Average Net Worth by Age -- How Do You Compare? -- The Motley Fool

....
Wow. Those numbers are the polar opposite of the poll results. Once again, this forum is shown to be far from representative.
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Old 09-23-2016, 09:22 AM   #135
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Are these results fodder for those who say you shouldn't pay off your mortgage?
Or is that a can of worms
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Old 09-23-2016, 09:56 AM   #136
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Are these results fodder for those who say you shouldn't pay off your mortgage?
Or is that a can of worms
I would think that having a mortgage on your personal use real estate should guide you towards a lower ratio since your overall leverage to real estate is higher with a mortgage. To keep your risk equal you would probably reduce your RE ratio. Much like margin borrowing.
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Old 09-23-2016, 10:42 AM   #137
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Wow. Those numbers are the polar opposite of the poll results. Once again, this forum is shown to be far from representative superior.
FIFY.

Just kidding of course.
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Old 09-23-2016, 10:43 AM   #138
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This poll got me thinking.

Currently my house is 5% of investment portfolio. Prior to downsizing it was 9%. When I bought my first house it was probably 80% --- scary !

I love my little house. I finally live in a house where every room is used
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Old 09-23-2016, 11:04 AM   #139
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Ok not counting other RE over my ER years(duplex, timberland, Farm) and with the great benefit of hindsight (23rd year of ER) I do not believe my home ever exceeded 10% marked to market.

The big dog on the porch has always been index funds.

heh heh heh - I remember before the last housing kerfuffle we had more forum posters in RE. Am I thinking opportunity here or just wish full thinking?
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Old 09-23-2016, 11:13 AM   #140
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All that said - owning an expensive house outright gives me a robust "Plan B" option if the market tanks, one or both of us ends up in extended long term care, or some other catastrophic event. It gives me confidence to forgo the LTC insurance.
Selling an expensive home might work out well if the sudden need for resources is caused by a big increase in expenses (LTC, etc). But if it's due to a market downturn, it might not work out as well. It looks like a lot of oldsters have a lot of their net worth in their homes. If everybody decides at once to sell and move in with the kids, be a renter or to downsize, it might be tough on some RE market segments.

From DFW_M5's link:

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